Good health is always a sign of prosperity. Panama appears to have taken this motto to heart and is now determined to improve the country’s medical facilities, coverage and treatment, feats that do not come easily in a region historically afflicted by high rates of poverty and illness. At the height of its economic success and continued growth, the country is seizing the moment to expand medical infrastructure and prepare for the future. While much has yet to be done, expectations continue to grow as activity heats up.
As the economy expands, funding for health in both the public and private sectors is rising as well. In 2011 total health expenditure accounted for around $2.56bn, or 8.2% of GDP, up from $2.31bn in 2010 and $1.95bn in 2009, according to the World Bank. From 2008-11, the average expenditure reached 8.1%, a slight increase over the previous 20 years, when expenditure hovered around 7%. Spending per capita is also climbing, recorded at $703 in 2011, up from $493 in 2008 and significantly higher than the $315 recorded in 2003.
System
The health system in Panama has three main pillars consisting of the Ministry of Health (Ministerio de Salud, MINSA), the Social Security Fund (Caja de Seguro Social, CSS) and the private sector. Each segment operates separate coverage schemes and health facilities, with public sector services, encompassed by MINSA and CSS, making up the vast majority. A growing population and increased family income are two factors driving demand and requiring more resources directed towards the sector. According to the National Institute of Statistics and Census (Instituto Nacional de Estadística y Censo, INEC), some 861 health facilities were operating throughout the county in 2012, with 61 hospitals and 23 beds per 10,000 inhabitants.
In 2013 MINSA received a budget of $1.5bn, much of which has gone to new infrastructure projects throughout the country aimed at consolidating public sector services (see analysis). These projects are generating huge expenses, and the 2014 budget has already taken this into consideration, establishing yet another increase to $1.84bn. As such, several public hospitals saw significant increases, including Panama City’s Hospital Santo Tomás, allotted nearly $84.2m, $8.25m more than in 2013. The National Oncology Institute and the Children’s Hospital also saw budget increases of $ 4m5m, reaching totals of $27.8m and $43.3m, respectively. Though MINSA services are not free, they are the least expensive of all public health care and provide treatment for the lowest echelon of Panamanian society.
Of the three-tiered system, CSS is the largest segment, simultaneously operating as a health care provider and pension fund administrator. As such, all workers are required to pay a percentage of their paycheque to CSS, entitling them to coverage. Employers are also required to pay the fund a monthly percentage, which accumulates into employee pensions. According to the latest available data from 2011, this segment covered 80% of the population, including workers and their dependent family members, as well as retirees living on pension benefits, amounting to 2.97m people. Foreigners are entitled to CSS coverage as long as they are working within the country and pay taxes.
Private Sector
While the demand for health services has risen, public system facilities do not always meet the needs of patients, fuelling the growth of a small but strong private sector. In Panama City several of the high-quality private hospitals covering the spectrum of general services include Centro Médico Paitilla, Hospital Punta Pacífica, Hospital Nacional (HN), and Clínica Hospital San Fernando (CHSF), the country’s first autonomous private facility operating since 1949. Both Punta Pacífica and CHSF have accreditation from the Joint Commission International. Several years ago sector professionals created the Association of Private Hospitals in Central America, Panama and the Dominican Republic, allowing facilities and doctors to share information, technology and skills.
Patients who do use these facilities either have private insurance or pay out-of-pocket and make up a limited segment that includes well-to-do Panamanians and foreigners, as well as the growing middle class. In 2011 out-of-pocket spending on health accounted for 82.5% of private expenditure, which amounted to around $832m that same year. Craig Morrissey, administrative advisor of HN, has a positive outlook for private sector activities. “The private system is growing quickly, following patterns of the country’s overall growth,” he told OBG. “Employees are receiving better pay and benefits.” However, this is not always displayed by sector numbers, he added, pointing out that the newly insured who are part of employer sponsored plans may not use them because of deductible or co-payment costs.
Insurance
Though universal health coverage has yet to be instated, all Panamanians and foreigners can use MINSA facilities, which are less expensive than the other two schemes but have longer wait periods. Current government initiatives aim to provide not only improved physical infrastructure, but also insurance schemes for uninsured Panamanians. All tourists are entitled to free insurance for 30 days for accidents and unforeseeable illnesses, up to $7000. The insurance is renewed every time a visitor enters the country through Tocumen International Airport.
The panorama for private insurance has become an attractive venture in the past two decades as individuals seek to widen their horizon for coverage options. Many companies have begun offering their employees private insurance schemes, and several foreign players have recently entered Panama, particularly from nearby countries such as Venezuela and Colombia. Several firms from Colombia have also attempted to introduce the HMO health care model, popular in Colombia, whereby insurance providers operate their own facilities and all treatment that extends beyond their capacities is passed on to third-party hospitals. However, according to Morrissey, this model has not changed the market and no other local firms have copied such strategies. “Many people in Panama do not like restrictions when it comes to health care and so the status quo has remained stable,” he said. In Panama insurance providers often manage care as opposed to actually providing services. HN accepts all local insurance companies and also works with many US and other foreign companies.
Expansions
While Punta Pacífica is the newest private hospital, built in 2006, HN recently underwent a major expansion involving technology improvements and added capacity. The expansion was completed in 2013 at a final cost of $22m, with the addition of 14 private rooms, eight suites, seven intermediate ICU beds, an 18-bed emergency department with a trauma bay, as well as an ambulatory surgery centre. In the first quarter of 2014, HN will be completing a $ 14minvestment in a new building for medical offices and parking, as well as CIRRO, a cancer centre that offers services such a radiation therapy, brachytherapy and radiosurgery. Part of the expansion included two “smart” surgical suites mainly used for ambulatory surgeries, for which demand has increased significantly, according to Morrissey. These additions go in line with the global trends of minimally invasive surgery. “As surgery becomes less traumatic for patients, their recovery time speeds up phenomenally,” Morrissey told OBG. Such procedures mean fewer days spent in hospital and larger capacity without increasing space. In some cases, minimally invasive surgery cuts recovery time from six weeks to two weeks, Morrissey said. “For everyone’s sake, we hope medicine becomes more preventive, but that relies more on cultural change than the actual health system,” he added. Within Central America and the Caribbean – excluding Puerto Rico – HN is the only hospital with the Da Vinci surgical robot, some of the latest technology in minimally invasive surgery. According to Morrissey, the machine has become the gold standard for radical prostatectomies and kidney surgeries.
Other recent additions include a firm called MiniMed, which has installed four walk-in primary care facilities with several others on the way. While these sites do not operate 24 hours, they diversify options for Panamanians and decongest emergency rooms in general hospitals. However, Morrissey does not believe there is much more room for general service facilities. Rather, trends point towards the need for more specialty treatment. New companies like MiniMed tend to start in Panama City and then expand to the regions.
Efficiency
For the public sector, improved utilisation of resources is becoming a major issue. In many less populated areas of the country, MINSA and CSS have facilities that offer the same services, unnecessarily exhausting resources. Edgardo Fernández, medical director of CHSF, believes these repeated services are not justified and burden the entire health system. He said such conditions also increase competition among public and private health care providers. To address this situation, authorities have begun to integrate MINSA and CSS services. In late 2012, the regional hospital for the district of 24 de Diciembre, administered by CSS, became the first fully integrated facility. The switch means that uninsured MINSA patients from the eastern part of the region can now seek treatment closer to home instead of travelling to the Santo Tomás hospital in the heart of Panama City.
Mixing
In particular cases when the public system is overstretched or cannot perform specialty treatment, MINSA has turned to the private sector through public bidding. Several service bids are published once or twice a year through the online platform, Panamá Compra, administered by the General Office of Public Contracts (Dirección General de Contrataciones Públicas, DGCP). In recent years, MINSA has solicited many services for heart surgery, according to Fernández, who believes these are essential for unravelling bottlenecks. The private and public systems are actually more connected than may appear on the surface. With the lack of human resources, many health care workers split their time to work in both, provoking mixed reactions. Morrissey, for example, sees this phenomenon as advantageous, arguing that physicians keep in practice by performing many surgeries in the public system, as opposed to minimal activity among private patients. However, specialists like Fernández believe doctors are overworked, diminishing overall productivity.
Human Resources
It is commonly remarked that Panama lacks qualified workers, especially in the health sector. According to INEC, Panama had 14.3 doctors, 12.4 nurses and three dentists per 10,000 inhabitants in 2010. These figures trail behind Latin American averages for 2009, which were 17.3 doctors, 13.9 nurses and 3.9 dentists per 10,000 inhabitants. Conditions are worse in provinces, with places like Darién having as few as 6.5 doctors per 10,000 inhabitants in 2010 and Ngäbe Buglé with 1.3 doctors and 1.1 nurses per 10,000 inhabitants. Doctors and nurses must undergo two years of residency in the public health system to obtain medical licences – one year in Panama City and the other in the provinces. Though this controls quality and helps the deficit in rural areas, most sector specialists believe two years is excessive and the system could be more efficient with shorter time requirements. Most regional countries require only one year of residency.
Moreover, while the Universidad de Panamá has the most prestigious faculty of medicine, only a few private universities offer similar programmes, limiting access to future doctors and nurses. Outside the university, many institutes have begun offering nursing programmes in direct response to the deficit. However, MINSA imposes extremely strict criteria for such institutions. According to Fernández, on several occasions MINSA has denied medical licences to institute graduates, not recognising their diplomas as valid. “High health standards are a priority, but we feel that sometimes MINSA takes bureaucratic procedures overboard,” he told OBG. “Any institute that considers offering nursing programmes or professional medical degrees should take care to closely follow all government regulations for education standards and diploma validation.” According to Morrissey, the deficit of nurses is a greater problem than that of general practitioners. “It is common for doctors to study medicine abroad,” he told OBG. “But no one goes abroad to study nursing.” For Morrissey, the bottleneck for doctors is in becoming a specialist, for which local public institutions offer limited space.
Legal Restrictions
Though until recently domestic law prohibited foreigners from practising in Panama, several loopholes brought foreign practitioners to the country. In many rural areas where Panamanian doctors do not want to work, the government hired foreign physicians, but restricted them to practice only within the public sector. While most of these contracts last for only a year, many doctors have remained in their posts due to the large deficit of specialists. Foreigners can also become Panamanian citizens through marriage, thereby earning the rights to practice medicine. The catch is that all new doctors must perform two years of residency. For Morrissey, this is the setback discouraging many foreigners from working in Panama. “For a student out of medical school, this is not a problem,” he said. “But doctors who have been practicing for 20 or 30 years are not willing to go through that ordeal again.” MINSA recently developed a new Code of Health, with CHSF actively participating in roundtable discussions to integrate elements and concerns, including special focus on allowing foreign medical professionals to practice in Panama. Such discussions alarmed a segment of local health professionals. Following the congress’ passing of Act 69 in early October 2013, which allowed foreign medical personnel to work in Panama, medical unions led a 30-day strike, opposing the new law and the impact it would have on domestic workers’ job stability. Following negotiations, the government agreed to amend the law, and later that month Act 678 was passed with unanimous support, allowing foreigners to work in Panama but only in certain jurisdictions.
Medical Tourism
While medical tourism is popular elsewhere, most local professionals interviewed by OBG were pessimistic regarding the industry. “In Panama very few foreigners arrive seeking medical treatment,” Fernández told OBG. The only significant push was made by Hospital Punta Pacífica in 2006, which marketed heavily and signed contracts with hospitals in the US and Canada. However, the effort did not yield the expected results, and procedures are limited mainly to plastic surgery and dentistry, areas not often included in insurance plans in developed countries.
Still, foreign relations among Panamanian facilities remain common. HN is administered by the American Hospital Management Company, headquartered in Washington DC, and CHSF has signed agreements with Tulane University in New Orleans. “There is a lack of knowledge on what options exist for medical treatment, so as a country we are focusing on marketing and publicity to open the doors to new patients,” Fernández told OBG. “If US Medicare patients were allowed agreements with facilities in Panama, both patients and hospitals would benefit enormously.”
Further to this, he added that politically speaking, writing such agreements into the foreign trade agreement with the US could also help the US government resolve its current medical crisis. As for foreign retirees living in Panama, obtaining medical plans tends to prove a burden due to advanced age and health problems.
Illnesses
As in most countries, the public sector runs initiatives to prevent and control infectious diseases like HIV and tuberculosis, which in 2011 accounted for 19.1 and 41.2 cases per 100,000 inhabitants, respectively. Surprisingly for a tropical country, the incidence of malaria in Panama is fairly low, with only 9.5 cases per 100,000 inhabitants, according to MINSA data collected in 2011. Dengue, on the other hand, is more prevalent, going through yearly cycles with different strands. Ministerial initiatives that involve community education and fumigating aim to combat these trends. According to official statistics, the dengue ratio in Panama was 104.2 cases per 100,000 inhabitants.
Pharma
Although Panama has a small local pharmaceutical industry, most products are imported from abroad. Prices are one of the main factors behind consumer decisions to purchase products, according to Fernández. As such, generic drugs have found a healthy market at significantly lower prices than their brand name counterparts. Part of the reason behind trust in generic drugs is the strict regulations enforced by the National Pharmacy and Drug Bureau. When a firm wants to introduce a new drug, it must go through this agency. Paperwork includes company background, scientific publications demonstrating the success of products, as well as tests at Panamanian laboratories. Generic medicine is required to supply bioequivalence tests. Any company looking to enter the segment should keep in mind that licences for medicine last only three years, so renewals must be frequent. Fernández said he has seen many good products taken off the market due to companies failing to renew their licences.
Outlook
Despite fundamental setbacks, mainly in the form of limited human capital, indicators suggest that Panama is taking the necessary steps to improve its health care system. Growing capital among the population should increase demand for private sector services. However, joint initiatives between firms and the government will prove pivotal to covering the medical needs of Panamanians. Such encompassing work may be just the prescription for strengthening the backbone of one of the region’s fastest growing economies.
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