Current System’s Shortcomings and the Need for Change
Mexico’s private healthcare system is facing a structural crisis that necessitates changes to the current model based on fee-for-service, as it fails to incentivize quality and align the interests of hospitals, physicians, insurers, and patients.
The Fee-for-Service Model: The Core of the Problem
The existing fee-for-service model, where hospitals and physicians earn more by performing more procedures, tests, or hospital days, is at the heart of the issue, according to Guillermo Torre-Amione, rector of TecSalud – the healthcare system of the Tecnológico de Monterrey.
- 50% of healthcare spending comes from patients’ pockets.
- Only 10-12 million Mexicans have private health insurance.
- The current model does not incentivize quality; instead, it encourages volume.
Insurers argue that their margins are minimal or even negative, while hospitals believe the payments they receive are insufficient and do not reflect actual care costs. Patients face annual increases in medical insurance, with some cases seeing hikes of 50% to 70% annually. Many retired adults struggle to afford annual health insurance costs exceeding 300,000 or even 400,000 pesos.
Call for a Value-Based Hospital Model
During the 3rd Congress of the National Association of Private Hospitals (ANHP), executives agreed on the need for change and urged migrating to a value-based hospital model. This shift aims to improve quality, outcomes, and reduce costs.
“The Mexican healthcare system, both public and private, is broken. We are at a critical juncture where we must be creative to seek a new reality, as the system cannot sustain much more,” said José María Zubiría Maqueo, general director of Centro Médico ABC.
Roberto Bonilla de la Garza, general director corporate of Grupo Hospitalario San Angel Inn, warned that most private hospitals in Mexico heavily rely on the insurance system, posing a structural risk to their sustainability.
Jesús Ruiz López, general director of Grupo Angeles Health System, acknowledged that while significant change may take time, maintaining the open competitive model’s benefits is crucial. This model encourages physicians to compete and strive for the best quality and care.
The Path Forward: A Long-Term Transition
José Testas Antón, general director of Hospital Español, emphasized the urgency of rethinking Mexico’s private healthcare system, especially for the 12 million people with private medical insurance who haven’t found an efficient cost-reduction scheme.
Testas Antón criticized insurers’ misunderstanding of hospital costs, comparing them to hotel rooms. He stressed the need for alignment of interests and collaboration between insurers, hospitals, and physicians.
Key Questions and Answers
- What is the main issue with Mexico’s current healthcare system? The fee-for-service model fails to incentivize quality and aligns poorly with the interests of hospitals, physicians, insurers, and patients.
- Why is a value-based hospital model needed? This model aims to improve quality, outcomes, and reduce costs in Mexico’s private healthcare system.
- How long might the transition to a value-based hospital model take? Estimates suggest it could take between 15 and 20 years.
- What challenges do insurers, hospitals, and physicians face? Insurers perceive high hospital costs, hospitals receive insufficient payments, and physicians face rising patient burdens.
- What is the solution proposed by healthcare leaders? Align interests and foster collaboration between insurers, hospitals, and physicians to create a sustainable healthcare system.
