COVID-19 and the Collapse of Private Hospitals in Puerto Rico

Photo: Matthew Perkins, Flickr

Spanish version here

In one of the most shameful acts by the private health industry in Puerto Rico, a number of hospitals have decided to suspend their employees in the midst of the health crisis triggered by COVID-19, the disease caused by infection with the new coronavirus that emerged in late 2019.

According to El Nuevo Día, over 500 employees have been laid off. This number includes many nurses, some of whom were first forced to stay at home and exhaust their sick and vacation leave before being fired. In the case of the San Jorge Children’s and Women’s Hospital in San Juan, the hospital administration suspended just over half of its workforce. Others have had their workday reduced.

All this indicates the failure of the privatization of Puerto Rico’s entire healthcare system. The sale of the public health system dates from the 1990s, when it was carried out by then Governor Pedro Rosselló, father of former Governor Ricardo Rosselló.

The administrators of these hospitals justify their decisions by arguing that they have serious financial problems caused by the decrease in patient visits since the curfew began and the shops closed on March 15, 2020. Like any business, private hospitals are looking to make money. Patients are clients. If profits go down, one of the options they have is to lay off workers, even if the business is providing healthcare in the middle of a pandemic.

In other words, the capitalist logic of the private hospital industry puts profits above health.

To cope with the pandemic, measures have been adopted at the local and federal levels to support hospitals, both public and private. In the case of local government, three resolutions have been approved, or are being discussed, that subsidize private hospitals with public funds, grant bonuses to nurses, provide subsidies for each bed available and establish a three month moratorium on payment of water and electricity.

All of these subsidies raise several questions. Will laid-off nurses collect the bonus? Is the government demanding something from these private corporations in exchange for subsidizing them with public funds?

At the federal level, Congress passed the Coronavirus Aid, Relief, and Economic Security Act, the largest bailout in US history. Its measures include an allocation of $100 billion to support hospitals. Puerto Rico is also under the cloak of this law, so local hospitals will benefit from this measure.

The layoffs in private hospitals have caused widespread outrage, and proposals are even beginning to be put forth to nationalize private healthcare – that is, for the government to take over the administration of private hospitals as a national security measure.

The private hospital industry

Statistics for hospitals and health professionals, especially for private hospitals, are incomplete and in most cases out of date. By one estimate, Puerto Rico has over 9,000 hospital beds between the public and private sectors.

Regarding the isolation rooms, so necessary to face such a contagious virus, a report by the Centro de Periodismo Investigativo highlighted the contradictory figures offered by the government and private companies, which range from 200 to 382 isolation rooms.

According to the Health Services Facilities Directory of Puerto Rico’s Department of Health, there are 66 hospitals scattered across seven regions. Fifty-two of those hospitals are private, 13 are public, and one is federal. Some of the private hospitals are in the hands of non-profit corporations, like the Sistema de Salud Menonita. Most public hospitals are located in the Centro Médico complex in the Municipality of San Juan. We do not know if this directory is up to date.

We do not include here the Diagnostic and Treatment Centers and the so-called 330 Centers, which are mostly in the hands of private corporations, both for-profit and nonprofit.

Most of the beds in private hospitals are concentrated in four hospital groups. First, there is the Metro Pavia system, with 12 hospitals, followed by Grupo HIMA San Pablo, with five hospitals. Doctors’ Hospital and Sistema de Salud Menonita both have four hospitals.

The Metro Pavia Health System is controlled by the Artau family. The administration of then-Governor Pedro Rosselló approved the so-called Health Reform, which opened the doors to the privatization of Puerto Rico’s public hospitals in 1994. Eduardo Artau Gómez, along with his wife Carmen Feliciano, not only started acquiring public hospitals, but they also raised the insurer First Medical. Their children, Eduardo, Karen and Francisco Artau Feliciano, joined the family businesses and their names appear on the boards of directors and executive team of both Metro Pavia and First Medical. Thus, the largest network of hospitals and one of the largest insurance companies in the country belong to a single family.

In September 2019, there was a protest near the emergency room of the Hospital Metropolitano de la Montaña in Utuado, one of the Metro Pavia hospitals. The protest was held in reaction to the hospital management’s decision to close the emergency room from eleven at night to seven in the morning, citing cost-effectiveness issues – another example of how business logic puts money above people.

Artau Gómez also has investments in the country’s tourism sector. According to El Nuevo Día, on August 2019, a month before the Utuado protest, Artau already had over $70 million in investments in various hotels, such as the old Pichy’s Hotel in Guayanilla, the Lagoon Villas County in San Juan and the Embassy Suites in Dorado. In addition, Artau Gómez, Carmen Feliciano and the company First Medical were part of the group of bondholders who took legal action against the government and the Government Development Bank (GDB) when the Alejandro García Padilla administration approved the Moratorium Law that stopped the payment of the GDB bonds in 2016.

In the case of the Grupo HIMA San Pablo, the company was founded by Joaquín Rodríguez and Carlos Piñeiro. Both announced their retirement in 2018, although they decided to retain positions on the company’s board of directors. According to HIMA’s website, the current president and executive director is Armando J. Rodríguez. The executive team also has Jaime Rivera Dueño as senior vice president. Rivera Dueño headed Puerto Rico’s Department of Health under the administration of Carlos Romero Barceló (1977-1984). In January 2009, he again held the position of Secretary of Health under the government of Luis Fortuño. However, failing to reach a consensus in the Senate for confirmation, he resigned from the post six months later.

In 2013, several media outlets reported on the attempt of Grupo HIMA San Pablo to enter the Spanish health market, when the company participated to acquire the concession of three hospitals by the Comunidad de Madrid. In December 2012, the Spanish government approved the Fiscal and Administrative Measures Law, which opened the way for a series of privatizations, including the privatization of health. Opposition protests were organized by unions and health workers, and HIMA executives were greeted with a protest at one of the hospitals. The concession was eventually canceled by the Comunidad de Madrid due to both public pressure and irregularities in the process, which meant that HIMA failed in its attempt to enter a market outside of Puerto Rico.

In the past years Grupo HIMA San Pablo has fired dozens of employees, alleging a reduction in their patients and clients.

Puerto Rico’s Hospital Association and the bailout

Hospital administrations are organized through the Puerto Rico Hospital Association (PRHA) to advance their interests. Although there is representation from the public sector in the PRHA, it has functioned as a business association to protect the interests of private companies. Its executive president is Jaime Plá Cortés, who serves as the organization’s spokesman. Since the curfew began, Plá Cortés has had a big presence in the media and in government meetings, representing the interests of private hospitals.

According to the website, Karen Artau, president of the Metro Pavia System, and Jaime Rivera Dueño, senior vice president of Grupo HIMA San Pablo, belong to the AHPR’s board of directors.

The PRHA has been active in demanding federal and local aid. On the one hand, they joined the request that the American Hospital Association made to Congress for financial rescue. This request was approved on March 27 as part of the measures included in the Coronavirus Economic Security, Aid and Relief Act (CARES Act), through which $100 billion in grants will be available to hospitals, both public and private. These funds will not only help cover the expenses related to the treatment of the coronavirus, but will also cover the losses that the hospitals have endured as a result of the curfews. The law does not provide details regarding how those subsidies will be administered and what requirements they have. At the moment, everything is at the discretion of the U.S. Health Secretary Alex Azar.

In Puerto Rico, on March 27, the PHRA sent a letter to the governor requesting a rescue, alleging serious financial complications. The wave of layoffs began in private hospitals just four days later. We do not have exact figures but, according to El Nuevo Día, they exceed 500 employees. At the time of publication of this article, the local government has approved the following measures to subsidize private health.

First, there is Senate Joint Resolution 507, which grants private hospitals $5,000 per month for each authorized bed, and between $150,000 to $250,000 to Diagnostic and Treatment Centers and Family Health Centers with emergency rooms. These payments will be made during April, May, and June. The Puerto Rico Electric Power Authority and the Puerto Rico Aqueduct and Sewer Authority are also ordered to grant a three-month moratorium on the payment of electricity and water, respectively. This resolution has already been approved.

On the other hand, there is the Joint Resolution of the Senate 508, which orders the insurers that administer the government’s health plan and the Health Insurance Administration (ASES, by its Spanish acronym), the agency in charge of managing private medical plans financed mainly with Medicaid funds, to advance the payments of the next six months to hospitals. These advances cannot be less than 80% of the average claims of the past six months. This measure is expected to alleviate the short-term financial problems of private hospitals. At the time of publishing this article, this resolution was approved by the Senate, but it is still pending the approval of the House.

Finally, there is Joint Chamber Resolution 666 which, among other things, grants a bonus of $3,000 to nurses in the private sector, $3,500 to nurses for professional services, and $4,000 to nurses in the public sector. The resolution also allocates $30 million to hospitals for the purchase of equipment and materials. This measure seeks to reward the work of nurses who are a key part of the first line to face the pandemic. However, with the massive dismissal of health professionals, serious doubts arise. Will laid-off nurses collect their bonuses, even if they have been laid off? At the time of publishing this article, this resolution had been approved in the House, but since it was approved with amendments in the Senate, it must return to the House for a new vote.

These measures subsidize private hospitals with public funds. And yet, it is noteworthy that none of the measures takes concrete action regarding the newly announced layoffs, nor do they require the protection of private hospitals’ workforce or clarify whether private hospitals are part of a central health plan to deal with the coronavirus.

Profits are private, losses are public. Those who pay are the workers.

Better working conditions

Public celebration of staff working during the pandemic, particularly healthcare personnel, stands in stark contrast to the reality of their dangerous working conditions and poor pay they receive. The media has reported on the flight of doctors from Puerto Rico to the United States in search of better pay. The emigration of nurses has seen less coverage.

The last time there was an increase in the minimum wage for nurses was 15 years ago, the product of Act 27 of 2005.

According to numbers provided by the Colegio de Profesionales de Enfermería de Puerto Rico, there are around 38,600 active nurses in Puerto Rico. At the time of the publication of this article, 184 nurses had been fired. Of all active nurses, 90%, or nine out of ten nursing professionals, are women. The issue of justice for nurses is also an issue of justice for women workers.

A good salary and good working conditions are crucial for strengthening the retention of nurses and health workers in the country. In fact, while Puerto Rico faces the pandemic as private hospitals lay off their employees, higher-paying job offers for health professionals come from the United States.

On the issue of the emigration of medical professionals in the midst of the pandemic, the executive president of the Puerto Rico Hospital Association, Jaime Plá Cortés, said: “This has been the case all the time and we have no way of avoiding that. The only thing that is different today is that before they left because they were going to have a better quality of life and a peace of mind. He who leaves will expose himself to death.” (PAI’s translation).

Ironically, these regrettable comments by the spokesperson for the hospitals were made during the international year of nurses, as declared by the World Health Organization.

Nurses and other health professionals risk their own lives to save others – especially during this pandemic – which is precisely why they must be paid a fair wage. House Bill 2144 is active in the Legislature, which seeks to increase the minimum wage for nurses in the private sector. Organizations representing the interests of nurses, such as the Colegio de Profesionales de Enfermería and the Unidad Laboral de Enfermeras(os) y Empleados de la Salud, have endorsed this measure as one of salary justice.

The Puerto Rico Hospital Association is opposed to the increase. Jaime Plá expressed through a written presentation that the Association considers the measure as an “extremely onerous imposition” due to the financial impact it would have on hospitals. The Association estimates the cost of the increase at about $142 million. Similar arguments were used in 2005, when they also opposed the increase in the minimum wage for nurses.

Other health workers who expose their lives during this crisis, such as respiratory therapists and radiology technicians, deserve recognition. It is also important that Puerto Rico do not forget who failed them in their most vulnerable time and put profits above people.

The coronavirus has exposed the immense weaknesses of Puerto Rico’s health system. Health should not be a commodity through which profit is sought, but a fundamental human right for all people. Alternatives such as nationalizing hospitals and establishing a universal health plan are proposals that should be at the center of public discussion.