Clark Bell, former editor of Modern Healthcare, got a firsthand look at the Chilean healthcare system last May as part of a trade/study mission for senior healthcare executives hosted by the Academy for International Health Studies. For a commentary by AIHS President Jonathan Lewis-"Developing countries, developing markets"-visit the international section at www.modernhealthcare.com. For more information on the academy, visit www.aihs.com.
The Republic of Chile is determined to build a cost-efficient, service-oriented healthcare system easily accessible to all of its 15.3 million residents. Despite facing many of the same obstacles as other developing South American nations, President Ricardo Lagos believes healthcare reform can serve as a catalyst to raise the country's standard of living.
The president's reform plan calls for service improvements and more accountability from the government providers that deliver the bulk of the nation's medical services under a universal program. Expanded hours for primary-care clinics, reduced waiting times for treatment and an emphasis on preventive medicine are among the goals. Lagos, elected president in January 2000, also wants to encourage growth in private-sector healthcare, although he advocates closer regulation of the private health plans that insure more than 3 million patients.
However, conservative political forces that have the backing of labor unions and the nation's medical association are looking to expand the public health bureaucracy.
"Change does not come easy to my country," says Vito Sciaraffia, M.D., a healthcare economist at the University of Chile in Santiago. "Reforming healthcare requires strong leadership and political consensus. We will see if the will is there."
Chile is slightly larger than Texas in overall area, but its spaghetti-strand geography (2,670 miles long with an average width of 110 miles) breeds diversity in weather, landscape and regional priorities. The climate ranges from arid desert in the north to temperate air in the central region and subarctic conditions in the south. The majestic Andes dominate the landscape and create a cushion of isolation between Chile and its South American neighbors. Bustling Santiago, the nation's capital, shapes the economic, political and cultural framework. The city and its suburbs contain about 5 million people, one-third of the total population.
Most Chileans say they are satisfied with the nationalized healthcare system, although funding is tight and the system has become increasingly dependent on the growth of the private sector, which now accounts for about 22% of the market. Workers covered by private insurance peaked at 1.6 million in 1996, with 3.8 million total covered lives. This year, an estimated 1.35 million workers and their families have private coverage, bringing the total to 3.3 million covered lives.
No Medicare-type entitlement program exists in Chile. Public providers are responsible for treating retirees, at little or no charge, prompting some workers to complain that they are subsidizing the cost. The poor and indigent are covered under the public system.
Chile prospered during the 1990s, a decade marked by impressive job creation, moderate inflation and an annual gross domestic product growth rate of 7.4%. The global economic slump has slowed the momentum (last year's GDP growth was 5.3% and trailed off to 3% during the first half of this year), but Chile's economy remains more stable than that of Argentina, Brazil, Peru and other South American nations. The 2001 Index of Economic Freedom, published by the Heritage Foundation and the Wall Street Journal, rated Chile the 13th freest economy in the world-the highest ranking of any Latin country.
Chile spends about 6% of its GDP on healthcare, compared with about 13% in the U.S. and 10% or more in Western European countries. Infant mortality and other measures of quality performance are well above global averages, and the average life expectancy is 75.9 years, compared with 76.9 years in the U.S.
The public healthcare system includes 182 hospitals and more than 2,000 clinics. It employs nearly 90,000 workers and is considered a vital jobs program in a nation with an unemployment rate of nearly 9%. Chile has 5.4 physicians per 10,000 people, compared with about 22 per 10,000 in America.
FONASA is the government agency charged with managing the finances of the public health system. Employers transfer 7% of worker salaries (with a cap of $130 U.S. per employee per month) to FONASA, enough to cover nearly half of the government's total healthcare budget of $2.2 billion. The government's central fund contributes the remainder.
Payroll deductions also fund disability insurance. A workers' compensation program covers 4 million employees and 83,000 companies through two major mutual insurance programs. An employer levy that averages 1.8% of total wages paid funds to the workers' comp program. The two insurers operate their own healthcare system comprising 20 hospitals with a total of 1,700 beds, 223 clinics, and 472 workplace first-aid stations. The workplace approach began in the late 1950s as a reaction to high absentee rates, a surge in workplace injuries and high insurance premiums.
The private sector is dominated by 26 health plans called Isapres.Although only 15% of the population has private insurance, those people account for just under one-fourth of the nation's healthcare spending. The four largest plans that are part of the Isapres-Consalud S.A., Isapre Banmedica, Cruz Blanca and Colmena G.C.-control more than two-thirds of the private insurance market.
The Isapres contract with networks of private hospitals and physician groups. Monthly premiums average $56 per family. The nation's 180 private-sector hospitals have some 12,000 beds, compared with 29,000 at public hospitals. About 90% of the 15,000 physicians employed by the public system also moonlight in private practice. Another 1,000 physicians are exclusively in private practice.
The Isapres are plagued by heavy utilization, even though they are free to reject applicants because of health status, age or lifestyle. Hospital lengths of stay average more than six days per patient, compared with four days for public hospital patients. Privately insured patients average 12 annual encounters with providers, up from 10 in 1990. Health plan profit margins have dipped to about 1% in the past two years, down from 3% to 5% margins in the 1990s. In 2000, the total Isapres had revenue of $1.28 billion U.S. and recorded a profit margin of 1.8%.
Lagos is banking on greater equilibrium within the partnership of the public and the private sector. His reform plan calls for granting more autonomy to public hospital administrators and providing subsidies that allow low-income patients to join the Isapres.
"The people of Chile are better off if the government decentralizes the healthcare system and offers people choices," he says. "The government does need to take on a greater role in developing public health strategies."
In return for less government control, public hospitals will be expected to compete on clinical quality and patient satisfaction. But as economist Sciaraffia points out, "There are difficulties in measuring the quality of medical services. Implementing a system to measure quality would require more resources and a major commitment by physicians and the government."