Multi-Stakeholder Partnerships to Reduce Out-of-Pocket Expenses

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Working toward the common goal to improving Mexico’s private healthcare systems implies looking for multistakeholder partnerships with clearly defined goals, information transparency, shared risks and responsibilities, agree experts. While complex, these plans could help patients enjoy a private healthcare system at a competitive cost.

In Mexico, out-of-pocket expenditure in healthcare is one of the most evident signs of how expensive healthcare may be to a patient in primary care. “Pocket expenditure in health is linked to Mexico's informal economy, which is the source of employment for 50 percent of all workers, and low penetration of private insurance. Only about 9 percent of the population has private insurance. Moreover, 46 percent of individuals finance healthcare by themselves, creating risk funnels in which should there be a catastrophic event, people suffer,” says Paula Garavito, Managing Director of AXA Keralty.

Javier Potes, Director General of the Mexican Consortium of Hospitals (CMH), explained that Mexico faces a vicious circle, in which high healthcare costs impact not only the general conditions of the populations' health but also the healthcare system. “That 9 percent is a dubious number since copayments and other insurance fees have to be paid out of pocket. The bottom line is: is healthcare really expensive or is there a lack of coverage and adequate financing schemes that provide affordable healthcare to the general public?" asked Potes.

According to healthcare experts, population ageing, low fertility rates, higher life expectancy and the epidemiologic transition toward chronic degenerative diseases, such as diabetes or hypertension, increase the medical need of a population. Meanwhile, the high costs of new healthcare technologies are also spilled to the patients, raising the overall cost of care. Furthermore, pocket expenditures are also increased by neglecting primary medical attention, said Horacio Garza Ghio, Health System General Director at CHRISTUS MUGUERZA. “The system in Mexico is reactive rather than preventive. Within the CHRISTUS Health group and other healthcare models in Latin America, 47 percent of fees are invested on primary attention,” he said.

Healthcare attention is also costly because there are not enough incentives for the patient or for hospitals, said Cesar Carrasco, Executive Managing Director at Hospitales San Angel Inn. “Healthcare attention is perceived as costly because it focuses on the incident. We do not have any incentive to promote prevention or early diagnosis. Economic incentives are not well distributed across the chain.” This problem could be addressed by increasing the number of people insured and by improving the hospital’s supply chain. “If we add providers, payers and suppliers for a holistic vision of healthcare we could create a virtuous cycle,” said Carrasco.

Alternative healthcare models should also be designed in close collaboration with other stakeholders within the healthcare value chain. “We need to acknowledge that the insurance model in Mexico is reactive as it provides severance only when the problem has already occurred. There should be an alternative model that involves every link of the chain of the healthcare system. We need a model establishes not vertical network but an intertwined network in which private medical stakeholders share benefits rather than just increasing their own profits, ,” says Garza Ghio. This will ultimately be reflected in the healthcare costs.

To improve, different stakeholders need a common goal, said Gustavo Fernández, CEO of Grupo Torre Medica. “The pandemic set a good example on how healthcare stakeholders can work together toward a better healthcare.” During this period, public and private parties created partnerships based on the needs of the patients. These partnerships involved insurances, hospitals and other parties, explained Fernández. “If the entire chain shares information, sits at the table then we can reduce costs for patients while increasing the overall benefits for hospitals too,” he said.

The draft of a possible solution to improve the system should focus on two main areas, argue experts. First, parties should share relevant information across the value chain, from suppliers to hospitals, insurance and patients. Second, the sector needs a network that shares benefits and risks. "It will take years to optimize pocket expenditure but there will come a time when pocket expenditure becomes private insurance. To lower healthcare costs, there should be a commitment in which all actors of the system assume a risk to deliver better services and more competitive costs, with a technological backup that diminishes risks,” says Garavito. The key is understanding how economic incentives are established throughout the chain to address them with clear, shared objectives and well-defined goals,” said Carrasco.

To achieve these alliances, sharing information on best practices that improve healthcare services is essential, said Garza Ghio. “Businesses are built on real information. For as long as we do not have a free flow of information, we are walking blind. Suppliers know this and they sell products at different prices to different hospitals.”

As information is essential to build a collaborative model, transparency becomes a key element. “When information is transparent both in costs and results when medical outcomes are certain parties should be rewarded. Reward patients that take care of themselves and prevent" said Fernández.