Innovation and infrastructure investment enhance Peru's health sector

Peru’s health sector significantly improved over the last decade as officials worked to expand health care infrastructure, lower barriers to access and modernise public sector institutions. President Martín Vizcarra Cornejo’s government aims to further advance progress through an increase in health spending that officials hope will fill medicine and equipment shortages and lead to infrastructure development. These efforts feed into the government’s goal of achieving universal health coverage by 2021.

Challenges remain, however, including not enough personnel in health centres, a surge in non-communicable diseases and disparities in access and quality between rural and urban populations. These gaps have been addressed at least in part by increased numbers of private clinics and insurance offerings. Officials are also turning to innovation and technology to propel the sector forward, in line with the recent work conducted by the Ministry of Health ( Ministerio de Salud, MINSA) to provide broader access to health care and improved communications through interconnected health centres.

Structure & Oversight

MINSA provides oversight over Peru’s health sector, implements government initiatives and operates the largest insurance provider, Integral Health Insurance (Seguro Integral de Salud, SIS), which covers around 60% of the population. Peru’s decentralised health care system is administered by five entities. The largest two are SIS and the state Social Health Insurance (Seguro Social de Salud, EsSalud), which provides services to approximately 30% of the population. The armed forces, national police and the private sector provide services to the remaining 10% of the total population. The Superintendency of National Health also acts as the industry’s supervisory and regulatory body.

The government’s prioritisation of developing the health sector has been reflected in its spending. Peru’s 2019 budget included PEN18bn ($5.4bn) for the health sector, a 13.7% increase from the PEN16bn ($4.8bn) allotted in 2018. The health budget, which accounts for 10.8% of the total budget, includes funding for reducing childhood chronic malnutrition and for improving maternal and neonatal health.

The authorities have not always had the capacity to implement programmes that require high levels of funding, however. This was seen in 2018 when MINSA used 41% of its budget in the first nine months of the year to combat the shortages of medications and supplies. “Public expenditure remains insufficient because there is a gap in infrastructure and equipment,” Eduardo Carreño Díaz, central manager of health services at EsSalud, told OBG. “There is also a significant shortage of professionals, with 6000 to 7000 medical workers needed.”

Indicators

Legislative changes over the past 10 years have driven improvements in health indicators. In 2009 the Universal Health Insurance Law requiring every Peruvian to have insurance was passed. Additionally, reforms in 2013 strengthened health care regulations and restructured MINSA. According to the Boston Consulting Group (BCG), Peru saw one of the largest gains in well-being in its 2018 assessment, improving in 33 indicators between 2007 and 2016. Peru rose to 78 out of 152 countries in the BCG’s ranking, up two from the previous year and from 90 in 2009. Peru’s life expectancy was 69.8 years in the World Economic Forum’s “Global Competitiveness Report 2018”, making the country third in the Latin American and Caribbean region in terms life expectancy, and 31st out of 140 countries for this health ranking. Peru placed 32nd in the report’s overall health category. Maternal mortality rates are on the decline in Peru, falling to 68 deaths per 100,000 live births in 2015 from 185 per 100,000 live births in 2000, according to MINSA. The under-five mortality rate also dropped, from 38.7 per 1000 in 2000 to 15 in 2017, according to figures provided by the World Bank. UNICEF similarly found that chronic malnutrition of children under five fell to 12.9% in 2017 from 18.1% in 2012, and the proportion of births attended by qualified health personnel rose from 85.9% in 2012 to 93% in 2017.

Shifting Needs

In the years ahead, Peru’s ageing demographics will have a significant impact on the country’s health indicators and performance, according to Carreño. “Peru’s population is becoming increasingly elderly,” he told OBG. “This will put a larger number of people at risk of multiple chronic pathologies that are not necessarily infectious but require high levels of care. To manage this, there must be a focus on not only recuperative activities but also preventative care and geriatric doctors.” This aligns with the national census, which found the number of Peruvians aged 60 and over increased from 9.1% in 2007 to 11.9% in 2017, with nearly 3150 centenarians.

Even in the shorter term, an insufficient number of hospital beds remains a national challenge. As of 2017 there were a total of 50,662 hospital beds in Peru, or approximately one bed for every 632 residents, up from 44,195 beds in 2007. Comparatively, Peru had one bed for every 10,000 patients, compared with 24 beds in Brazil and 21 beds in Chile. However, changing demographics and improvements in technology will necessitate development beyond additional hospital beds. “There will be greater growth in the complexity of care than the number of patients requiring care,” Gabriel Álvarez, executive director of the San Pablo Group, which oversees a network of clinics in Lima and other provinces, told OBG.

Diseases

Although infectious diseases are on the decline, among the top-10 causes of death are influenza and pneumonia (18.1%), other respiratory illnesses (4.2%) and bacterial illnesses (3.8%), according to MINSA. Respiratory infections tend to be more concentrated on the Pacific coast, in the Andes and in the jungle. However, gastrointestinal diseases such as cholera are more of a problem in rural areas, where 42% of the population lives without basic sanitation.

Nutrition continues to be a priority for the government, as it is greatly linked to chronic child malnutrition and anaemia, adult and child obesity, and diabetes. As such, the 2019 budget earmarked funding for combatting chronic childhood malnutrition and anaemia as part of a goal to reduce the former to 6.4% and the latter to 19% by 2021.

Childhood obesity has increasingly become a problem in Peru, particularly among children between the ages of five and nine. According to MINSA, three out of every 10 children in that age range have an excessive amount of fat, with higher rates for those who reside in coastal areas such as Lima.

In a bid to reduce childhood obesity, in March 2019 Peru created guidelines to promote healthy eating in schools under the Law for the Promotion of Healthy Food for Children and Adolescents, the regulations of which were published in 2017. Commonly known as the Healthy Eating Act, the legislation aims to protect children and adolescents from obesity and mandates ingredient warnings on the labels of foods that are high in salt, sugar and fat. These trends are more prevalent among adults, with obesity and overweight rates for people over the age of 15 at 57.9%, according to the National Institute of Statistics and Informatics (Instituto Nacional de Estadística e Informática, INEI). In addition, 70% of Peruvians between the ages of 30 and 59 are either overweight or obese, according to the National Institute of Health. The institute noted the high levels of excess fat were a result of poor dietary habits, the proliferation of processed food and a lack of physical activity.

Diabetes is the fifth-leading cause of death in Peru, with approximately 2950 deaths per year, and this is rising. Between January and June of 2018, there were 8098 cases of diabetes registered by MINSA, a rate that was expected to surpass the 15,504 cases registered in 2017. Jorge Calderón, the president of Peru’s Diabetes Association, told local press that half of diabetes patients do not have access to health examinations and medicine. “Diabetes is increasing significantly in the country,” he told local press.

Obesity and diabetes are not the only non-communicable diseases on the rise in Peru. More than 2m Peruvians suffer from chronic kidney disease, often associated with diabetes and hypertension. MINSA issued five clinical practice guidelines related to chronic kidney disease that focus on lifestyle changes and specialised health professionals. According to Carreño, hypertension and kidney damage are the most significant challenges for the sector.

Public Health

Although Peru made gains in health indicators, there is a continued need for further advancing the country’s health infrastructure in order to meet growing demand and increase access to quality care. To this end, in December 2018 MINSA committed to establishing between 60 and 80 public health centres across the country in 2019. That same month the Ministry of Economy and Finance approved a $125m loan from the Inter-American Development Bank and the International Bank of Reconstruction and Development to partially finance the Integrated Health Networks Project in Peru. The initiative is a collaborative project between the World Bank, which will be contributing an additional $125m, and the government of Peru, which will contribute $65.7m. The project is expected to benefit 20.3m uninsured people, and will cover clinical practice guidelines; human resource competencies; a redesign of the health care model with emphasis on a new pattern of disease burden; information and process management; and the improvement of medical distribution chains.

Strengthening mental health care capacity is also a focus of the public system. According to MINSA, 20% of Peruvians suffer from a mental disorder and only 20% of those with mental disorders receive treatment. MINSA has specifically been working to develop mental health services in public hospitals and announced in September 2018 it would create 75 additional community mental health centres in hospitals to offer outpatient care. The first centres were opened in 2015 and have allowed health officials to reach remote communities. As of 2018 there were 31 community mental health centres in Lima, Ayacucho, La Libertad, Lambayeque, Moquegua, Callao, Huancavelica and Piura, among other areas.

Private Health

A 2017 report by Contribuyentes por Respeto, a Peruvian non-governmental organisation, found discrepancies in quality between public and private care. Patients wait an average of 14 days at clinics run by EsSalud and SIS, compared to 13 days at those run by the armed services and national police, and six days at private clinics. Wait time to see a doctor, meanwhile, averaged 135 minutes at MINSA-run facilities and 57 minutes at private clinics. Public sector doctors spent on average 11 minutes with patients, while private-sector clinicians spent 15 minutes. The study also found that insurance disbursement covered 27% of private health care costs, while patients under private plans paid for the remaining 73% out-of-pocket.

Private facilities have often been looking for accreditation in order to improve public confidence and regulate quality, because even though private clinics perform better than public ones in some indicators, a perceived lack of oversight has led some Peruvians to prefer government-run facilities instead. “Accreditation is part of the private health sector’s efforts to demonstrate international recognition, as patients now demand better health care comparable to the best health centres in the country and in the world,” Álvarez told OBG. “Unfortunately, there is no national accreditation that all have to abide by, and as a result there is a perceived quality gap between the private and public sectors.”

Nevertheless, Peruvians are gradually turning to the private sector through health service providers (entidades prestadoras de salud, EPS). In 2018 the 17 EPS clinics in Lima – which account for 70% of the country’s private health services – saw a turnover of PEN1.8bn ($544.9m), representing a 10% increase from the year before. Around 4.9m patients attended the clinics, which was 4% more than in 2017. Approximately 4.1m patients received ambulatory care, 75,000 received accidental emergency care and 572,000 received medical emergency care. EPS providers are expecting to accelerate growth by targeting small and medium-sized enterprises (SMEs). There is room for growth, as insurance company Pacífico Seguros estimates 3.4% of SMEs have an EPS plan, and provider Positiva Seguros expects one-fifth of their growth in 2019 to come from SMEs.

Global investors have been taking notice. In December 2018 Portuguese insurer Fidelidade purchased a 51% stake in Positiva Seguros. In January of that year US firm UnitedHealth Group finalised the purchase of medical service provider Banmédica, a shareholder of Pacífico Seguros, for $2.7bn. Also in January, Unilabs announced an agreement to acquire Arias Stella, which is the largest histopathology laboratory in Peru.

Private health providers compete with not only public providers but also pharmacies, Álvarez told OBG. “The private clinics’ competition at the primary level is not only other clinics but also convenience store pharmacies that can often replace the initial consultation. This has been especially significant as the economy has suffered a slowdown,” he said.

Telehealth

Digitalisation and telemedicine, or telehealth, are also priorities for officials in the health care sector. In February 2019 MINSA approved a new telehealth framework to promote the modernisation of health benefits through ICT. The framework aims to bring all health institutions – private and public – under standardised norms and allow health professionals to receive information remotely. According to Liliana Má Cárdenas, general director of telehealth at MINSA, videoconferencing and other forms of communication will also increase accessibility to individuals located in rural areas. As of October 2018 some 250 health facilities were already connected to the telehealth network.

The Integrated Health Networks Project in Peru aims to encourage digitalisation through the creation of three data centres in Lima, Trujillo and Huancavelica, which will store the public health sector’s digital health records. Centralisation is expected to both simplify processes and provide for more timely diagnoses. “In an emergency, not having patient data can be life or death,” Diego Venegas, deputy minister of health insurance benefits at MINSA, told local press.

Insurance

According to the National Home Survey’s 2018 third trimester records, 77.3% of the population has health insurance. The survey estimated 17.5m were covered by MINSA’s SIS, 10.7m by EsSalud and 2.7m by private entities. In urban areas 36.8% were covered by SIS and 30.3% by EsSalud, while in rural areas 80.1% were affiliated with SIS and 5.9% with EsSalud. According to Carreño, this is at least partially due to EsSalud’s services for the elderly, who tend to be more concentrated in coastal urban areas.

Workforce

According to 2015 figures from INEI and the Medical College of Peru, there were 67,657 doctors in the country, 54% of which were in Lima. Additionally, there was a deficit of 16,630 specialist doctors countrywide, according to MINSA. In terms of efficiency, Peru has one of the highest ratios of administrators to doctors in the region. According to the Contribuyentes por Respeto study, Costa Rica had eight doctors per administrator, and Uruguay had five doctors per administrator. Peru and Paraguay, meanwhile, both had three administrators per doctor.

Medications

Despite being home to a pharmaceuticals industry with high potential, there is a shortage of medicines and other medical supplies across the country. According to the Directorate General of Medicines, Supplies and Drugs, in 2017 approximately 70% of health centres had a shortage of basic medicines and only 6% of health facilities were optimally stocked. Pharmacies have filled some of the gap, as a 2018 report by INEI found 94.2% of private pharmacy users are affiliated with public health systems (47.8% with SIS and 46.4% with EsSalud). While there are formal pharmacies, there are also informal, unregulated outlets that have raised concerns about professional standards and quality of medical treatment.

Pharmaceutical exports reached $49.7m between January and November of 2018, up 4.8% over the same period of 2017, according to figures from the Association of Exporters (Asociación de Exportadores, ADEX). The addition of injectables and medications for cancer treatment boosted shipments as the diversified product offer generated greater value-added. According to ADEX, Peruvian pharmaceuticals are exported in four categories: for human consumption, with Ecuador, Chile and Bolivia as the main destinations; veterinary products, which are mainly sent to Bolivia and Ecuador; medical materials sent to Ecuador and Argentina; and biological products, primarily sent to Bolivia and China. The National Society of Industries (Sociedad Nacional de Industrias, SNI) estimates pharmaceutical revenues from exports could reach $1.3bn a year by 2022. However, José Silva, director of the SNI’s pharmaceutical production committee, said this increase could only take place if improvements were made in the transparency of the public purchase system and regulatory capacity, as well as if an equal tax on domestic and international medicines was implemented within the system.

Outlook

With increased funding into the health sector, the government laid out a series of projects and initiatives aimed at increasing access to and improving the quality of health care. These are notable steps towards achieving universal coverage by 2021 that build on already established improvements in health indicators. Although challenges remain, particularly with juggling out-of-pocket costs, a rural-urban divide and a shortage of doctors and medical specialists, Peru’s drive to strengthen its health infrastructure is expected to have a positive impact on the sector’s performance in the future.