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Island’s Hospital Industry Performed Well In Ever-Challenging Environment

Hospitals sought efficiency, invested in new technology, and planned future expansions


December 25, 2003
Copyright © 2003 CARIBBEAN BUSINESS. All Rights Reserved.

Over all, 2003 was a good year for the island’s $1.7 billion hospital industry, though it fell short of some members’ expectations.

"It was pretty good but not what we expected," said Joaquin Rodriguez, chief executive officer of Hospital Interamericano de Medicina Avanzada (HIMA) in Caguas, the island’s fourth-largest hospital.

The local hospital industry, comprising 59 hospitals and representing 40,000 direct jobs, confronted a wide range of challenges in 2003, including controlling costs, facing up to insurers over late payments for medical services to the indigent, securing adequate malpractice insurance, managing nurse shortages, and keeping up with the health needs of a population of close to four million.

Amid the ups and downs faced by individual players, the industry as a whole enjoyed at least one crowning moment when President Bush signed the $400 billion Medicare reform legislation. One of the bill’s provisions, which the Puerto Rico Hospital Association (PRHA) lobbied for, increased Medicare payments to local hospitals by 12.5% starting on April 1, 2004 and by another 12.5% on Oct. 1. "This isn’t everything we wanted, but it will help our members continue to achieve some of our objectives," said Alfredo Volckers, PRHA’s president-elect (CB Dec. 4).

Successful hospitals that didn’t have to worry about bleeding budgets in 2003 faced other concerns. One of HIMA’s biggest challenges this year was operating at 99% capacity, a serious enough problem that the hospital now has to turn away business, according to Rodriguez. He said it will take the hospital about two years to address this situation through a multimillion-dollar expansion slated to begin next year (see related story on page 23).

Pavia Health also made plans for expansion through a $12 million cancer center to be built in Hato Rey next year. It is the second such center on the island, joining the one operated by Hospital Español Auxilio Mutuo de P.R. Inc., also in Hato Rey.

For public hospitals operating in the red, 2003 was a year to rein in losses and seek ways to improve the bottom line. The Puerto Rico & Caribbean Cardiovascular Center reduced its $24 million deficit to $12 million during fiscal year 2003 (ended June 30). This was accomplished through more-aggressive collections efforts and higher fees when renewing contracts with health plans, Executive Director Carlos Melendez told CARIBBEAN BUSINESS recently.

Some hospitals, such as Pavia and Mepsi Center, complained during the year of late payments from insurance companies for emergency-room services provided to indigent patients, who may or not be covered under the government’s Health Reform program. Such cases weren’t across-the-board, however. HIMA, for example, has had no problems getting paid by Humana, the insurance company that covers Health Reform participants in the Caguas area, according to Rodriguez.

Inadequate malpractice insurance continued to be a major headache for hospitals in 2003. Industry executives said that in the absence of affordable and adequate coverage against lawsuits, they are resorting to self-insurance complemented by umbrella policies covering excess risk.

Hospitals in 2003 also paid attention to keeping up with technology, whether for clinical use or to achieve administrative efficiency. Pavia Health, for example, invested $1.8 million to set up an imaging center that will enable it to provide services such as invasive radiology testing and virtual colonoscopies. It also acquired a $400,000 state-of-the-art NeuroNavigator that allows surgeons performing delicate brain surgery to determine the exact position of a lesion.

Controlling costs through efficiency remains the top priority for the hospital industry. "Hospitals are being more watchful in controlling costs and seeking alternatives to create efficiency," said Volckers. For example, because Medicare pays a fixed amount for hospital stays, Pavia succeeded in reducing the average hospital stay from 7.3 days to 6.3 days by ensuring that all tests and procedures required by the patient are carried out on time. "The less time the patient stays, the greater the return [for the hospital]," said Volckers.

This Caribbean Business article appears courtesy of Casiano Communications.
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