Despite a number of setbacks, Panama’s health care sector has seen significant advancement in recent years. The former administration of Ricardo Martinelli oversaw a period of significant infrastructure expansion, and the country is closer than ever to achieving universal coverage. Elected in May 2014, the current government of Juan Carlos Varela has stated its commitment to improving access and increasing efficiency in the sector, while at the same time maintaining the previous government’s emphasis on expanding public infrastructure. The administration now faces the task of addressing the myriad of challenges that continue to affect the health care sector, in particular capacity and health personnel shortages, while leading the country through the transition to a prevention-focused health care model.
Structure
Panama’s health care system is characterised by a large public sector, composed of the Ministry of Health (Ministerio de Salud, MINSA) and the Social Security Fund (Caja de Seguro Social, CSS), as well as a small but expanding private sector. Each operates separate coverage schemes and facilities.
CSS Coverage
The CSS is the largest, operating both as a health care provider and a pension fund administrator. The CSS’s health coverage is financed by contributions from employees, who pay a percentage of their wages to the system, entitling them and their dependent family members to coverage. Employers are also required to pay the fund a monthly percentage, contributing to the employee’s pension plan.
Foreigners working in Panama are entitled to coverage under CSS, provided they pay taxes. Tourists were previously entitled to free medical insurance for 30 days for accidents and unforeseeable illnesses, up to a maximum of $7000. However, to curb rising costs, this was eliminated in June 2014.
Given Panama’s relatively low unemployment rate – 4.8% in 2014 according to the National Institute of Statistics and Census – the reach of CSS within the country is extensive. In 2013 an estimated 3.47m people (of a population of roughly 3.9m) were covered by the CSS; of that total 1.6m were contributors, while the remaining 1.8m were dependents, according to figures by the Comptroller General. The figure represents a notable increase from 2.75m in 2009.
MINSA
While MINSA services are not completely free, they remain the least expensive option available to low-income groups. MINSA has the most extensive network of health facilities across the country. In 2014 MINSA operated 830 health facilities, significantly more than CSS’s 80 facilities. Together the two institutions provide care in 910 public facilities.
In addition to being an important service provider, MINSA is also the entity in charge of overseeing the national health system and as such, formulates policy and acts as the regulatory entity.
Private Providers
The private sector comprises four large hospitals – Hospital Nacional (HN), Centro Medico Paitilla, Hospital Punta Pacífica (HPP), and Clínica Hospital San Fernando (CHSF) – and a limited number of smaller health establishments, which provide services to the upper echelons of society, including a growing percentage of the population with health insurance, in exchange for direct payment.
Urban Vs. Rural
Although the country has made significant advances towards achieving universal coverage – according to the PanAmerican Health Organisation, MINSA and CSS covered around 90% of the population in 2014 – access to health services remains inequitable, a fact readily visible in the marked discrepancy between health outcomes in urban and rural settings. According to MINSA, in 2014 there was a nine-year gap between the region with the highest life expectancy (Panama at 79 years) and the lowest (the indigenous reservation Comarca Ngobé Buglé at 70 years), bringing the country’s overall life expectancy to 77 years (up from 75 in 2006).
Moreover, maternal mortality rates in Comarca Ngobé Buglé and Darién were, respectively, 4.2 and 1.5 times higher than the national average of 64.9 per 100,000 live births, according to MINSA’s data for 2012. Likewise, under-five mortality rates in Bocas del Toro and the indigenous comarcas of Ngobé Buglé and Kuna Yala were 2.4, 1.9 and 1.6 times higher, respectively, than the national average of 19.9 deaths per 1000 live births in the same year.
Limited Capacity
This marked urban-rural divide is due mainly to limited capacity in rural settings. Health infrastructure, including availability of health workers, medicine and technological equipment, is concentrated in urban centres, leaving indigenous and rural populations with limited access to health services. In fact, in the indigenous comarcas MINSA is the only provider, offering a basic package of outpatient services. In the comarcas of Ngobé Buglé and Kuna Yala and the region Bocas del Toro the rate of beds per 1000 inhabitants was as low as 0.2, 1.1, and 1.6, respectively, in 2013, according to MINSA.
Urban rates are considerably higher, with Colón and Panama City recording 9.6 and 7.9 beds per 1000 inhabitants, respectively, that year. The same trend applies to doctors, with the Panama region registering 20.8 doctors per 10,000 inhabitants compared to the indigenous comarcas Ngobé Buglé and Kuna Yala, where that figure was 1.2 and 5.3, respectively. The country’s average was 15.9 doctors per 10,000 inhabitants in 2012, according to MINSA.
Limited capacity is not restricted to rural areas. In urban centres, population growth and rising family incomes are two factors driving up demand for health services, and putting additional pressure on the care system, which is characterised by crowded facilities and long waiting periods for surgery.
Public Expansion
To address capacity shortages, the public sector is currently undergoing unprecedented expansion, as the government seeks to increase and renovate existing health infrastructure. During the Martinelli government, the country embarked on an ambitious infrastructure expansion plan, which included the construction of five regional hospitals, a medical city in the capital, and a network of smaller health care facilities and ambulatory services.
The most emblematic of the projects is CSS’s medical city, known as Ciudad Hospitalaria, in Panama City, which broke ground in mid-2012. Spanning 31.9 ha and an initial price tag of $587.5m, the complex will add some 1700 beds, more than 40 surgery rooms, 200 emergency room beds and offer 3500 parking spaces. Once operational, the project is expected to have the capacity to attend some 72,000 emergencies annually. Awarded to Spanish contractor FCC, construction of the first phase, which included emergency, hospitalisation and external consultation facilities, was scheduled to be completed by end-2014. However, construction has faced a series of delays, caused by heavy rains, strikes and technical difficulties. In late February 2015, the project was 30% complete and an estimated $300m over budget, while the CSS and the FCC were reviewing the contract.
Francisco Javier Terrientes Mojica, the minister of health, told OBG that changes to the initial design were being contemplated to optimise the use of the complex. Ramiro De León, president of the board of directors at CSS, told local media the project is likely to reach completion after 2016. The facility, which was the previous government’s third-most-expensive project, has come under some criticism. Concerns about the medical city’s size and inaccessibility, as well as potential difficulties securing the human resources required to administer and operate the massive complex, have raised questions about the feasibility of the project.
Regional Emphasis
To increase access to health services in rural areas, the previous administration also began the construction of five hospitals in the regions. Multinational contractor IBT Group is heading four of the projects, including the $59.5m Anita Moreno Hospital in Los Santos, the $110.5m Manuel Amador Guerrero Hospital in Colón, the $36.5m Metetí General Hospital in the Darién region and the $30.6m Bugaba Hospital, slated for Chiriquí.
Construction of all four hospitals had been suspended since April 30, 2014, following disagreements between IBT Group and MINSA. However, construction works resumed in January 2015. In early 2015 the Manual Amador Guerrero, Metetí General Hospital, Bugaba Hospital and Anita Moreno Hospital were 36%, 60.5%, 69.3% and 45% complete, respectively.
Spanish construction firm FCC won the bid for the construction of the fifth hospital – the Luis “Chicho” Fabrega hospital – in the region of Veraguas, for an estimated $121m. The hospital was inaugurated in 2014. Once completed, the five new hospitals will add nearly 1500 beds and benefit more than 658,000 users (approximately 17% of the population), according to MINSA. Aimed primarily at low-income patients, MINSA also tendered the construction of an additional 10 new primary health care centres, representing an investment of $102m.
Spending
The heavy spending initiated with the previous government is likely to continue through Varela’s term, though with some moderation. The 2015 budget allocates nearly $2bn to MINSA (an increase from $1.84bn in 2014), of which $590.5m is earmarked for investment. The current government, which assumed power in July 2014, has stated its commitment to seeing health infrastructure projects reach completion, while normalising contracts inherited from the previous government, which allegedly lacked transparency. The tender for the new children’s hospital in Panama City, for example, was suspended after anomalies in the evaluation process were found in February 2014. As of April 2015 specifications for the new tender were being prepared, according to MINSA. The tender for the new National Cancer Institute, which MINSA awarded to international Spanish civil engineering group ACCIONA in May 2014 at a value of $172.7m was also cancelled in December that year, after a series of anomalies were detected. The 33,350-sqmetre 280-bed hospital is slated for the Clayton district, 11 km from Panama City, and will also function as a teaching hospital. Tenders are published through an online platform and are administered by the General Office of Public Contracts.
Private Sector
More than a decade of stable economic growth has seen demand for private health services increase significantly, as more individuals with disposable income, including a rising number of foreigners, seek faster and better care than the public system currently offers. According to the World Health Organisation (WHO), private expenditure represented 31.4% of total health spending in 2012, with the majority of that total (79%) being out-of-pocket expenditure (down from 85.1% in 2010). Private prepaid plans accounted for the remaining 21%. While this last figure remains low, insurance penetration rates are rising steadily, with the Comptroller General reporting that sales of health policies jumped 12.6% to $145.4m in the first nine months of 2014.
According to Edgardo Fernández, medical director of CHSF, the country’s first private facility operating since 1949, a law which entitles the country’s retirees to a 20-25% discount on medical services has also contributed to the rise in demand for private sector services. “Retirees make up a large percentage of the patients seen in private hospitals,” Fernández told OBG. Another noteworthy group is expectant mothers. “There is high demand for maternity services given the public sector’s inability to meet demand in this area,” Fernández added.
Private Expansion
Mirroring the expansion of the public system, most private hospitals are undergoing expansion to meet rising demand. The HN was no exception, unveiling in March 2013 a $22m-upgrade which included the addition of 14 private rooms, eight suites, seven intermediate intensive-care unit beds, an 18-bed emergency department with a trauma bay and an ambulatory surgery centre. In November 2013 the HN also inaugurated its new Centro Internacional de Radiocirugía y Radioterapia Oncológica, a cancer centre that offers services such as radiation therapy, brachytherapy and radiosurgery.
Likewise, the HPP, the newest of the four largest private hospitals which opened in 2006, is carrying out a $16m expansion project which will see the addition of two floors of hospital space and four floors of parking spaces. The project, which began in late 2012, is expected to be completed by 2016.
Primary Care
A recent addition to the private market is MiniMed, Panama’s first medical franchise specialising in primary care. Having opened its first facility in 2011, MiniMed has expanded quickly and now has seven walk-in primary care facilities across the country. Though the sites do not operate 24 hours, they diversify options and help decongest emergency rooms in general hospitals. However, trends for the private sector point towards an increase in specialised centres rather than more primary care facilities.
Skill Shortage
With the completion of a number of infrastructure projects over the coming years, the most significant challenge now is making new facilities operational, given the country’s skill shortage. “The lack of professionals in the sector has reached a critical stage,” Fernández told OBG. “It’s not just doctors that we need, the shortage affects nurses, radiology technicians, lab personnel and pharmacists.”
MINSA estimates the country faces a shortage of some 190 general practitioners, 700 nurses and another 700 medical technicians. Gynaecology, cardiology, anaesthesiology and neurology are some of the areas most affected by the shortfall in staffing levels, contributing to long waiting periods for patients in need of medical services in these areas.
According to MINSA figures, in 2013 the country’s density of physicians per 1000 inhabitants stood at 1.57, up only slightly from 1.46 in 2010. The ratio of nurses was lower at 1.34 per 1000 inhabitants, having increased only marginally from 1.27 in 2010.
The lack of an adequate pool of professionals is not an issue limited to the health sector, but rather a trend that affects multiple areas of the economy, and reflects the larger capacity limits of the Panamanian education system. The current government remains committed to increasing human resources for the sector, a feat that will necessarily entail expanding the capacity of the country’s medical faculties.
Efforts are being made to increase the number of available spaces in the faculty of medicine of the University of Panama, the country’s most prestigious institution. In February 2015 the government and the university announced an expansion of the programme which will see the addition of 100 places. Even so, at less than 300 students, enrolment is limited considering the annual demand. According to UP, the faculty receives some 2000 applications every year.
Help from Abroad
Given how pressing the shortage has become, in September 2013 the Panamanian Parliament approved a temporary measure to allow MINSA and CSS to hire foreign doctors and other medical personnel. However, there has been substantial opposition from labour groups, in particular the medical union, Comisión Médica Negociadora Nacional, which initiated a 30-day strike soon after the measure passed. Furthermore, there has been only limited success in attracting foreign professionals. “Most vacancies for foreign professionals are in remote and rural areas and there are simply no incentives for foreigners to relocate there,” Fernández told OBG.
Integration
Another significant challenge and an objective of the current government is increasing efficiency in the public sector. Carlos Rosales, regional adviser for the PanAmerican Health Organisation, told OBG, “The government’s goal is to transform the system, strengthening MINSA’s role as the regulator of health practices, with a view to ultimately making access to services more egalitarian.” To this end, the current government initiated in March 2015 a national debate with public health organisations, workers and civil society groups on the topic of integration of the public health system. One of the aims is optimising the use of MINSA and CSS facilities, which will prevent duplication and wasting resources.
Elisa de Lewis, executive vice-president and general manager of CHSF, told OBG, “A list of 12,500 pending surgeries in the public health care system should be an incentive for the government to include mechanisms that enhance efficiency of processes and improve patient care.” Technology may offer solutions, as has been seen in some of Panama’s neighbours. Javier Contreras, former CEO of HPP, told OBG, “The model in Chile is certainly one that Panama could learn from. It comprises an integrated assistance network that is showing very positive results with relatively low investments. They are integrating all levels of health care provision electronically to avoid redundancies and inefficiencies.”
The CSS and MINSA already display a certain degree of integration, with CSS patients able to receive treatment at MINSA facilities. In late 2012 the CSS-administered regional hospital for the district of 24 de Diciembre became the first fully integrated facility, providing uninsured MINSA patients from the eastern part of the Panama region with care closer to home.
In recent years, the degree of integration between the public and private sectors has also grown. Given its limited capacity, the public sector has increasingly relied on contracting services to the private sector in cases where it is overstretched or unable to provide specialist treatments. Furthermore, both MINSA and CSS routinely publish service and equipment tenders on the online platform www.panamacompra.com, inviting private sector bids.
Focus on Prevention
The savings from enhanced efficiency are expected to aid the country in the transition to a preventive health care model, another goal of the current government. “The idea is that with increased efficiency more resources can be allocated to preventive measures to curb the rise in lifestyle-related preventable diseases,” Rosales told OBG. The transition towards a preventive model is particularly important in the context of Panama’s health profile. With an ageing population, the prevalence of chronic-degenerative diseases is on the rise. According to WHO, chronic non-communicable diseases, in particular cardiovascular diseases, cancer and diabetes, are the main cause of death in Panama. Nevertheless, communicable diseases such as dengue, remain prevalent, primarily among rural populations. In 2013, 3538 cases of dengue were reported, according to MINSA.
In January 2015 the Varela government launched the country’s first national preventive health survey. The initiative will offer free health examinations to persons aged 40 and older in an effort to proactively map out health trends and contribute to the improvement of health outcomes in the country.
Contreras believes that a successful transition to a preventive model would need to be accompanied by a change in the insurance sector’s approach. “Currently insurance companies do not cover costs for preventive treatments, which discourages patients from undergoing preventive monitoring. To transition to a prevention-focused health care model, a reform in the insurance sector is needed as well as an increase in efforts to raise awareness,” he told OBG.
Medical Tourism
Though some of the attributes of Panama’s health industry, in particular its geostrategic location in Central America, air connectivity and relatively inexpensive procedures, would, in theory, make it an attractive destination for medical tourism, this segment has yet to take off. Growth prospects for the medical industry have been significantly hampered by the high occupancy rates in the country’s health facilities, which, according to Fernández, remain one of the main challenges to the development of medical tourism in Panama. “With the small number of arrivals so far being limited to mostly aesthetic and orthopaedic procedures, it has yet to become a really profitable business to attract further private sector attention,” he told OBG.
Compared to established medical tourism markets in the region such as Mexico or Brazil, Panama’s medical tourism industry remains nascent. According to the National Secretariat for Science, Technology and Innovation estimates, Panama accounts for 1% of the global medical tourism foreign exchange. However, the country is in the process of establishing a foundation for the industry. In 2012 a draft bill was presented to the National Assembly aimed at not only regulating the medical tourism industry but also making it more competitive. Among others things the draft bill declares medical tourism a national interest, and proposes the establishment of a medical free zone with financial incentives and a certification process for service providers. Within the private sector, the idea is also gaining some traction. In March 2013 the country hosted its first international medical tourism and global health conference, Panasalud 2013. The event brought together more than 150 doctors, dentists, hospitals and clinics, and provided professionals with a platform to share knowledge and market experience.
Once the industry does take off, the private sector should be in a good position to capitalise on it. The level of internationalisation of Panama’s private hospitals is generally healthy. HPP and CHSF are both accredited by the Joint Commission International. HPP, which also boasts an affiliation with Johns Hopkins, has a department dedicated exclusively to the design of packages for medical tourists.
Additionally, recent large-scale investments by private hospitals are being geared to the medical tourism industry. HN’s recent $25m renovation for example, included a “hotel section” with a courtyard and a number of private suites, a robot-operated pharmacy and new operating theatres. Centro Médico Paitilla is also converting former hospital wards to private rooms connected to a shopping mall via skyway links.
Pharmaceuticals Sector
Though relatively small, the Panamanian pharmaceuticals industry continues to register healthy growth, with International Marketing Services, a vendor of health care data, recording annual sales of more than $307m from August 2013 to August 2014, up from nearly $293m the same period the previous year. Brand-name pharmaceuticals accounted for the largest share of sales, at nearly $285m. Even so, with generics anywhere between 40% and 60% less expensive than brand-name pharmaceuticals, the generics market is also growing. Sales of generics grew from $19.3m to more than $22.3m in the same period and the increase in the price of pharmaceuticals products is likely to continue to boost the sale of generics.
Meanwhile, the Comptroller General reported a 5.5% rise in the consumer price index for medical and pharmaceuticals products during the period from September 2013 to September 2014.
Export Platform
The Panamanian market relies almost entirely (90%) on imported products. According to the General Comptroller, pharmaceuticals imports reached nearly $393m in 2013. More than half of these (around 60%) are delivered to CSS’s medicine programmes. A small national industry accounts for another 8% of the local market, according to the National Pharmaceutical Association and comprises Panamanian-owned companies producing locally, including Medipan, Rigar, Lafsa, Prieto, San Rafael and Palm. Facing a series of challenges, including higher costs for importing raw materials, lack of skilled labour and delays in the registration process, local pharmaceuticals companies find themselves at a disadvantage when competing with international firms with a presence in the country which import their own products manufactured elsewhere.
Though some 300 international pharmaceuticals firms are present in Panama, including big names such as Novartis, Pfizer and Bayer, this segment represents only 2% of the local market. That is because rather than targeting the domestic market, international labs largely use Panama as an exporting platform and distribution centre for the region. The country’s connectivity, logistics and fiscal regime are attractive factors for international labs, most of which import to the Colón Free Zone, packaging and re-conditioning products which are then re-exported to the region with value added. In fact, multinational pharmaceuticals in the Colón Free Zone account for most of the country’s pharmaceuticals exports ($19m in 2013).
R&D
With a legal framework designed to attract foreigners, including clear regulations regarding stem cell research and national ethical committees, Panama remains a welcoming place for research and development (R&D). Jordi Fernández Capo, Roche Diagnostics’ general manager for Central America and the Caribbean told OBG, “The Ciudad Hospitalaria project will place Panama at the forefront of medical innovation in the region,” adding that “Panama has the tools and expertise to expand its investment into R&D.”
Outlook
As efforts to reach universal coverage continue, closing the gap in access and quality of services in urban and rural areas will become key to establishing a more egalitarian system. The recent rise in sector infrastructure is an encouraging step on to improving access, reducing waiting lists and improving health outcomes. However, the severe skill shortage remains an obstacle to the sector’s development, and one that will require a multi-faceted approach.
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