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US Congress Discrimination affecting the Puerto Rico’s Healthcare Ecosystem

By on November 8, 2022

The market dynamics that changed the Healthcare Ecosystem as we know it. 

The coronavirus pandemic has been the most impactful “Exogenous Schock” to affect the world’s health and economic sectors. The COVID-19 outbreak threw hospital systems throughout Puerto Rico into a systemic risk crisis that includes medical and financial challenges, which may force many institutions to change forever. While some of the more robust institutions will be able to brush off the impact of the pandemic’s adverse effects, some hospitals in Puerto Rico will not be able to recover.

Since the pandemic began on March 15, 2020, the estimated losses to the Puerto Rico healthcare ecosystem have reached $1,085,185,711 billion up to October 2021. In addition, the occupancy rates in all hospitals have fallen from 65% in 2015 to 57.7% in the second quarter of 2022.

We have projected that at least 45 hospitals would have to reduce operations, others would refocus their business model, and many would merge with larger institutions. At the same time, those too weak to continue will end up closing their doors. 

So far, there have been three acquisitions:

  • The sale of HIMA-San Pablo Cupey to Sistema de Salud Episcopal San Lucas. 
  • The sale of Hospital San Cristobal to Sistema de Salud Menonita and
  • The most recent one was the recently opened Sabanera Health to Orlando Health, a Central Florida Hospital operator and owner. 

There will be more consolidations in the Puerto Rico Healthcare market not only because of pandemic forced financial shock but because the three of the largest insurance companies are now owned by stateside corporations, including Anthem, Guidwell, and Kinderhook. This scenario will significantly attract Hospital operators that know and understand well these new insurance companies into a market that has been for a long time dominated by prominent local players. This reality will change how the industry looks and feels for decades.  

The U.S. Congress discrimination in Healthcare funding

A history of discriminatory statutory treatment for Medicare and Medicaid programs and payments, coupled with a unique economic, cultural, and socio-economic context, has impaired the development of a robust healthcare economy in Puerto Rico compared to elsewhere in the U.S. 

Each U.S. Citizen from Puerto Rico contributed 100% to the same Medicare and Medicaid program created by Congress; however, we receive less than 50% or less in benefits from our contribution, creating one of the worst discrimination examples courtesy of the U.S. Government. 

The Medicare FFS program data that Congress considered a standard for the ACA MA payment formula does not work in Puerto Rico. The resulting anomaly is that Puerto Rico’s average M.A. is as follows:

  • Puerto Rico’s Medicare Advantage benchmark is now 43% below the U.S. average. 
  • 38% of payments below the lowest State (H.I.) standard.
  • 26% of payments below the U.S. Virgin Islands (just 9 miles from Puerto Rico).
  • In Puerto Rico, this program has faced more than 20% reductions since 2011 compared to U.S. rates, while the U.S. average has increased by 4% over the same period. 

So while we get shortchanged and receive a bologna sandwich, mainland U.S. citizens receive shrimp and caviar.

For most U.S. Citizens from Puerto Rico, discrimination in healthcare is an everyday reality. Discrimination in healthcare is an unfair or prejudicial treatment of people that contribute equally for the same benefits, yet because we live on the U.S. territory and due to our characteristics of race, we receive benefits that are less than 50% of what we contribute, and this is not right. 

Let’s look at discrimination in the eye:

  • In the U.S., the per capita spend on healthcare is $13,000.
  • In Puerto Rico, the per capita allocation from Congress is $4,000.
  • Puerto Rico suffers discrimination in healthcare of $9,000 per capita or 69% less.
  • The cost of this discrimination to the U.S. Citizens of Puerto Rico is $29.9 billion per year or $300 billion during the last decade. 

This disparity with U.S. rates is one of the causes of the healthcare ecosystem’s financial challenges, in addition to the accelerated migration to the U.S. of many healthcare ecosystem professionals.

  • What would the healthcare sector look like today with such an infusion of capital?
  • How many lives could we have saved?
  • How much healthier would our lives be?.   

We highlight the top 10 Factors affecting the healthcare ecosystem.

  1. One of the biggest problems in Puerto Rico is that the most significant percentage of health spending arises because people do not take care of their health conditions on time. When they go to the health centers, their conditions are so critical that the cost of treating them is in the millions. For example, 2% to 3% of patients consume 80% of medical budgets.
  2. There is a need to focus on chronic diseases: diabetes is the most expensive condition in Puerto Rico due to genetic and dietary reasons.
  3. Lack of funds to carry out a Holistic Healthcare Model restructuring the entire system. The key is to create a holistic model of preventive healthcare: where the population is educated to take care of their health in a proactive way and with constant monitoring to learn how to stay healthy at all stages of their lives. 
  4. In Puerto Rico, a backlog exists in creating a Health Information Exchange System. Therefore, data is limited, and resources are scarce. For example, there are too many doctors in certain areas and not enough in others, such as endocrinologists. 
  5. Shortage of physicians wreaks havoc: According to figures from the Puerto Rico College of Surgeons, in ten years, 5,000 physicians have left Puerto Rico, and the vast majority have moved to the United States in search of better economic conditions and more excellent work flexibility. The loss amounts to 36% of physicians in Puerto Rico. Leaving Puerto Rico with 9,000 active physicians, or one physician for every 365 people. 
  6. Federal and state regulatory requirements have decreased Medicare and Medicaid payments on both a per diem and per stay basis and a considerable reduction in outpatient reimbursement.
  7. Diverse and stricter quality measures: the problem is that insurance companies have different quality measures that evaluate processes, not patient outcomes; there is an increased need to overhaul the systems and agree on a methodology that places patient care first. 
  8. Cataclysmic events: Hurricanes Irma and Maria in 2017 and the 2020 earthquakes followed by Fiona in 2022.
  9. Aging and contraction of Medical Specialties: making some critical beyond the capacity of our residency programs to maintain the need.
  10. We need a Champion: every ecosystem needs a champion to integrate the great work the P.R. Hospital Association and its members perform with other organizations.

These challenges and chronic underfunding have stalled the growth of Puerto Rico’s healthcare ecosystem. It continues to juggle with just $11.9 billion in funding when the correct number is $29.9 billion. That is 151.5% more than we currently receive. That amounts to $300 billion in the last decade, a fact that has made our population sicker and poorer. 

In conclusion, Puerto Rico’s healthcare ecosystem needs to be viewed holistically to make a total and absolute restructuring instead of continuing to put patches that have solved very little. 

Martin Luther King, jr used to say “Of all the forms of inequality, injustice in health is the most schoking and inhumane”

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