Increasing coverage: The government is investing to consolidate the national hospital system

While logistics and transportation haul in major public investment, initiatives in medical infrastructure should not go unnoticed. In 2010 the government launched an ambitious plan to construct five regional hospitals, a medical city within the capital, and a network of smaller health care facilities and ambulatory services. With several projects coming to a close, the question remains as to whether the country has sufficient resources to operate the new facilities.

Regions

Panama’s small size has been an advantage to the health care system. Even in the most isolated areas, the nearest hospital may take at most only an hour to access by car. However, as quality in regional facilities has traditionally lagged behind capital city standards, authorities were urged to refurbish existing regional hospitals and construct new ones in the hope of consolidating national health infrastructure.

The five new hospitals currently under construction will add nearly 1500 beds and are expected to benefit more than 658,000 citizens, approximately 17% of the population, according to the Ministry of Health (Ministerio de Salud, MINSA), which tendered off the design, construction and equipping of each facility. Multinational contractor IBT Group is heading four of the projects, including the $59.5m Anita Moreno hospital, located in Santa Ana, Los Santos; Colón’s new Manuel Amador Guerrero hospital, with $110.5m invested; the $36.5m Metetí General Hospital, in the region of Darién; and the $30.6m Bugaba Hospital, slated for Chiriquí.

Under Way

The Spanish contractor FCC obtained the bid for constructing the Luis “Chicho” Fábrega hospital in the region of Veraguas, with an estimated investment totalling $121m. In June 2013 faulty air conditioning systems provoked a serious fire at the old facilities still in use, forcing patients to evacuate the premises and reaffirming the need for a new hospital. The new construction will cover 42,000 sq metres with four floors, adding more than 300 beds and 344 parking spaces, and will open at some point in 2014.

The regional hospitals for Darién and Chiriquí are the only greenfield constructions out of the five planned projects and were originally expected to come online in June 2013. However, delays in construction now suggest that the hospitals will most likely be completed some time in the first half of 2014. The remaining projects involve major additions to already existing structures and have worked to keep their doors open to the public throughout construction.

Nevertheless, the slow pace of work on all projects implies that the remaining hospitals will not be completed before the end of 2014.

Tender

All five projects were tendered through a procedure referred to as llave en mano, or turnkey project, a popular system for local public bidding in which companies are required to seek project financing. IBT and FCC both operate regional headquarters in Panama and have gained certain levels of prestige, facilitating procedures to obtain local financing.

MINSA’s budget for 2013 is indicative of the many projects underway. Nearly $98m in public funds will be funnelled to both hospital projects in Chiriquí and Darién, as well as the construction of 10 new Primary Attention Centres for Innovative Health, destined for low-income patients. This sum represents around two-thirds of the total budget for MINSA, one of the country’s largest spending ministries.

Capital

Within the capital, authorities look to significantly boost coverage by constructing a medical city, referred to locally as “Ciudad Hospitalaria”. Already under way, the $587.5m complex will cover 31.9 ha, add some 1700 beds, more than 40 surgery rooms, 200 emergency room beds and include 3500 parking spaces. The new infrastructure, tendered by the Social Security Fund (Caja de Seguridad Social, CSS), should have the capacity to attend to 72,000 emergencies per year. Also in the hands of FCC, construction has been divided into two phases, the first one slated for mid-2014, when general and emergency services will become available. The second phase is expected to be fully operational a year later. The new facility will be named after President Ricardo Martinelli.

Challenges

Dr Jorge Martin, the deputy medical director at the privately run Hospital San Fernando, lauded the initiatives to improve public health care throughout the country. However, he noted that authorities have sidestepped several fundamental issues affecting the sector, such as lack of medical staff, which could cause significant operational deficits as infrastructure projects continue to expand. “The medical city is a great idea, but the infrastructure is too large for the current supply of medical personnel,” Martin told OBG. “Doctors will be lured from the private sector, and that is a serious threat to our hospital and other private facilities.” Within Panama City, the personnel most lacking are nurses, technicians and staff for laboratories and X-rays, he added.

Another pending issue for the medical city is its distant location, close to the recently constructed Centenario Bridge. Authorities will look to integrate a transportation system for patients before fully operating the complex in 2015.

According to Martin, Panama is already experiencing the consequences of a serious human resources deficit and excessive expansion of health facilities will take a toll on the overall system if legislation does not moderate restrictions on foreign physicians. “New installations are exacerbating competition among health facilities, primarily through the means of offering personnel higher salaries,” he said. Since building human capital in health services requires years of investment, the road to solving such problems will continue to factor in to sector development throughout the short to medium term. Much will depend on initiatives to improve both legislation and education.

Administration

A novelty among public services, the medical city also looks to put its administration out to tender during the first 15 years of operation. The contract will include basic services like cleaning, security, landscaping, parking and information systems, as well as administering the hotel that will go up next to the hospital. Bids closed in early October 2013 and nearly a dozen companies, including FCC, have placed bids for the contract.

However, medical personnel have already spoken up against the idea of putting the administration in the hands of a bidder grouped under the National Medical Commission for Negotiations (Comisión Médica Negociadora Nacional, COMENENAL). Workers argue that introducing private third parties into the public health system is prohibited by law. COMENENAL has made its case through several letters to government and press releases. CSS directors are divided on the issue, some siding with workers and others defending private administration as more efficient. The backdrop of the current conflict dates back to 2011, when the government attempted to pass a law on private-public partnerships that would usher in private management and operation of state laboratories. Doctors and medical staff responded with large protests, forcing authorities to pull the initiative.

Craig Morrissey, administrative advisor of Hospital Nacional, a private Panama City facility administered by a US-based American Hospital Management Company, believes the public misunderstood government intentions in 2011. “There was some fear that all health services would possibly become outsourced,” he told OBG. “But the law was not all encompassing, rather it was a way to introduce private participation in the public sector.” Although plans for third-party administration of the medical city are already in place and bids accepted, if discontent escalates, authorities may be forced to consider alternative methods involving purely public entities.

Pending Projects

Two other massive projects planned for the near future include the construction of a new Children’s Hospital and a new National Oncology Institute (Instituto Oncológico Nacional, ION), both under MINSA’s wing. Bidding procedures for the projects will be in the same modality as other public tenders in which companies are solicited to perform previous studies, design and construct the buildings, as well as provide upfront financing.

Though the estimated investment for Children’s Hospital has not been announced, bidding criteria established that all competing companies must have built a hospital worth more than $300m within the past 10 years. Bidding closed in mid-October 2013 and authorities hope to inaugurate the new facility at its central location on Avenida Balboa in 2016.

The cost of constructing the ION is estimated to be around $150m, and bidding began in December 2013 with six consortia participating. Funding for the project is expected to start early in 2014 and will paid in instalments through 2019. While annual patient demand currently reaches some 82,000, this figure is expected to increase to 93,000 by 2015, emphasising the need for the new centre.

However, if more cancer treatment specialists are not available by the time the curtain rises, many patients may very well be left sitting in empty space.