Navigating Healthcare Budget Cuts in Mexico

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Due to economic necessity, the Mexican government is attempting to slash annual spending; an act that could have serious consequences on the country’s ability to provide its citizens with healthcare. Here, representatives of government, associations, social security institutions, and private companies impart their expertise on how best to navigate these challenging waters.

“80 percent of our health expenditures are used to treat only 20 percent of the Mexican population, affected by only three main illnesses: diabetes, cancer, and cardio-vascular diseases.”

Mikel Arriola Peñalosa, IMSS

“As a consequence of a complicated international environment, the Mexican government faces difficulties in maintaining its annual budget year on year, and total budget cuts amounted to ten billion pesos in 2015 and nine billion pesos in 2016,” explains Cristóbal Thompson, executive director of AMIIF, the association gathering 43 pharma innovators implanted in Mexico.

In a country where total health spending only amounts to 6.2 percent of GDP, one of the lowest rates among all OECD countries, “real health spending’s growth has moreover been decreasing by 0.5 percent every year since 2012, while administrative costs have increased by five percent and represents 8.8 percent of total health spending – almost three times the average of the OECD,” continues Thompson. Furthermore, “the Ministry of Health is already strongly indebted to several drug manufacturers, at around seven billion Mexican pesos [USD 380 million],” explains Salvador López Brito, the president of the Health Commission of the Senate.

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In this dramatic context, “AMIIF is working closely with the main public partners related to the health and economic sectors around the necessity to urgently increase public investment in health, especially if we don’t want to compromise the economic potential of the country,” says Javier Amtmann Aguilar, chairman of the board of Menarini Mexico and president of AMIIF, while the association is currently assembling a strong, evidence-based case to demonstrate how investing in health would spark productivity in Mexico’s economy.

“I believe that the government and public stakeholders in general need more help, and more participation from both the industry and think tanks, to carry out the studies that are relevant to this assessment,” stresses Roberto Martínez Yllescas, general director of the Mexico Center for Latin America of the OECD, which also advocates for smarter and more transparent public health spending in Mexico.

These budget cuts undoubtedly put tremendous pressure on a public health system that moreover has to cope with Mexico’s epidemiological transition, while in 2020, the adult population will constitute the majority for the first time in the country’s history. “Chronic and non-communicable diseases have further deepened an unequal resources allocation, as 80 percent of our health expenditures are used to treat only 20 percent of the Mexican population, affected by only three main illnesses: diabetes, cancer, and cardio-vascular diseases,” explains Mikel Arriola Peñalosa, former head of Cofepris and recently appointed general director of IMSS, the largest social security institution in the country.

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In Mexico, 71 percent of the population is obese or overweight. More importantly, “one out of every three children can be considered as being in a state of obesity, which is a very alarming situation for the future of our country,” highlights Enrique Graue Wiechers, president of the National Academy of Medicine and rector of UNAM, the largest and one of the most prestigious universities in Latin America. Diabetes has also truly become a worrying epidemic threatening the lives of 13 million people (14 percent of the total adult population), half of them being still undiagnosed and only a quarter of the total having their disease under control.

“In Mexico, the diabetes patient population is still growing, while the prevalence of the disease is also further developing – despite the government’s efforts to tackle it,” relates Morten Vaupel, vice-president and general manager of Novo Nordisk Mexico. “If we are not able to implement game-changing prevention and control measures in the immediate future, health investments to cure chronic diseases will skyrocket from 80 billion Mexican pesos in 2016 [USD 4.3 billion] to 350 billion pesos in 2050 [USD 19 billion], and our health system will never be able to carry such a financial burden,” warns Mikel Arriola of IMSS, which provides medical services to 70 percent of the Mexican population and is deciding to lead the way in chronic disease prevention and management.

“In Mexico, the current diagnostic capacity prevents most patients from being properly diagnosed at the symptoms’ apparition, which creates a situation where they have to wait for many years and the disease to dramatically degenerate before receiving a correct diagnostic,” explains Juan Antonio Sánchez Baca, general manager of UCB Mexico.

As a result, the government’s priority is clearly “to strengthen Mexico’s prevention, diagnostic and treatment capacity, especially for chronic, non-communicable diseases, while generating better efficiencies within the overall health system,” says Mexico’s Secretary of Health Dr. José Narro Robles. In this regard, 2016 is set to mark the beginning of an ambitious reform that will implement exchange of medical services between the different social security institutions that make up Mexico’s public health system, namely IMSS (70 million beneficiaries, essentially workers of the private sector), ISSSTE (covering 13 million workers of the public sector) and Seguro Popular, the financial scheme created in 2004 to provide health services to the 55 million Mexicans without formal employment.

“The exchange of medical services will first generate significant improvement in terms of patient outcomes, while also engendering substantial savings for the different social security institutions and tremendously optimize their resource allocation,” continues Dr. Narro.

In such a fragmented public system, building bridges between social security institutions whose human and financial resources and processes significantly vary from one to another is easier said than done. “We have to find a consensus on the cost of each and every medical intervention among the different institutions, while also fostering knowledge transfer with regards to patient referral, billing, and payment collections,” confirms Gabriel J. O’Shea Cuevas, national commissioner of Seguro Popular, while an initial package of 700 medical services is currently under evaluation as part of the first stage of this reform. “In the long term, we would like to ensure that our beneficiaries can receive any kind of medical services in any hospital or health facility of the country, even if they belong to another social security institutions,” plans José Reyes Baeza Terrazas, general director of ISSSTE.

““When considering the construction of a new hospital or high-specialty health center, it should no longer be approached from the perspective of a single social security institution, but with a comprehensive, systemic development vision.”

Dr. José Narro Robles, Secretary of Health

 

In the meantime, the overarching objective of this reform would be to further expand this collaborative approach to other public health areas and notably include infrastructure development. “When considering the construction of a new hospital or high-specialty health center, it should no longer be approached from the perspective of a single social security institution, but with a comprehensive, systemic development vision,” explains Dr. Narro.

In this quest for greater cost-efficiency, medicine purchasing is not obviously left aside, and institutions look at further leveraging the heightened bargaining power offered by consolidated and integrated medicine purchasing schemes among all institutions and throughout the country. “Over the last three years, the latter have already allowed the overall Mexican public health system to save more than 11 billion pesos [around USD 560 million],” explains ISSSTE’s Baeza, while this institution also looks at enhancing medicine management and monitoring. Although these ambitious reforms could bring substantial savings and unify a health system scattered between a variety of public payers, innovators still have to navigate a fragmented public system under unprecedented financial pressure.

Writer: Laurent Pichotzki-Libano

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