Medical Costs in Latin America – A Change of Paradigm

ITIC – International Travel and Health Insurance Conferencescott-rosen

Article on our CEO’s presentation

Scott Rosen, CEO – ITIC Miami

Scott’s mission was to defend the actions and costs of medical providers, to a degree, as the other speakers in this session tended to be more critical of medical price increases. Shifting medical costs have resulted in massive increases in claims costs, and Scott analyzed the reasons behind these increases. The first reason is medical inflation in the area, which averages out at 10 per cent per year, although he noted that inflation in Argentina and Venezuela is so bad that the medical inflation part of it can’t be calculated. Currency devaluation in Brazil has also massively affected the cost and quality of care on offer. Acquiring medical equipment, then, in such countries, is incredibly expensive for medical providers. The private hospital segment has modernized medical equipment, all of which is imported, and so has resulted in increased costs for insurers – the same is true of medication. “The deck is stacked against Latin America as far as medical inflation is concerned,” said Scott. Compounding the problem is the cost of money in nations with inflation and currency devaluation, where banks charge enormous amounts to perform transactions, and the situation is further worsened by deficient public health services in many countries in Latin America, which push people towards private hospitals. There has also been a profound change in the paradigm of practicing medicine, with protocols shifting to international standards that demand an in-depth investigation of the origin of the ailment, as opposed to just treating the acuteness of the event, which inevitably pushes costs up. A lack of market regulation means that costs in the private healthcare industry are non-government regulated; and further pushing prices up is location – most Latin American economies are growing, and so, therefore, are real estate and development costs. Specialist physicians are also pushing up the cost of care – the cost of private education is rising, and thus the newly qualified physician has to charge more money. Insurers, Scott said, need to stop being shocked by expensive medical procedures in these countries, because a lot of the time the equipment being utilized costs more in these regions than it does in the US. If insurers want high quality care, then they have to pay for it. More hospitals in the region are becoming JCI accredited, which again is not cheap – insurers want quality, and with that comes costs. Insurers should if possible utilize the following techniques to control medical costs: use the same hospitals for their referrals to avoid one-time situations in which the insurer is suddenly desperate to get a direct billing agreement in place; send accurate and clear instructions as to eligibility and coverage (being specific and prompt about coverage caveats); request all the necessary medical documentation in real time so as to avoid payment delays due to medical information pending, as hospitals view such actions as speculating. Respecting agreed payment terms is key, and finally, use an intermediary company if patient volume is scarce or too scattered.


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