Francisco Mora, director of the General Individual and Family Health Insurance of the Ecuadorian Institute of Social Security (IESS), explains how he got rid of the IESS Administrator’s Fund for the first time to inject about 195 million dollars into the health fund. He claims that it was a completely legal operation, which also covers the costs of prevention due to the El Niño phenomenon and part of the debt with external medical institutions. It also outlines measures being taken to optimize the use of in-house units and reduce the high incidence of external providers owed $1.2 billion.

What investment movements were made in the Health Fund and why?

We have several insurance policies, four specialized: Health, Rural Social Insurance (SSC), Pension Insurance, Occupational Risks and another administrative fund. There are funds that are in surplus, and others in deficit. The Management Fund is in surplus. For this reason, a month and a half ago, for the first time, IESS set aside 195 million dollars from the Administration’s fund for the benefit of CES. This means that the money was injected into the Health Fund.

Where did those funds go?

I have my own internal units (hospitals) that I have already secured funds for and they have a quarterly budget. But of the disinvestment of $195 million, $44 million went to medical units, for the costs of dealing with the El Niño phenomenon. It is thus assigned to specific medicines for El Niño, defined in the list of the Ministry of Health. Among them are medicines for deep-rooted diseases: viral and bacterial infections and polytrauma. Likewise, for medical devices that are also related to the same phenomenon and for infrastructure and unit maintenance. It is the first time that the Health Fund has invested in infrastructure after at least ten years. These were amounts that may seem small: $4,000 or $6,000, but they improve infrastructure. The rest went to external service providers. These healthcare providers represent a high cost for a variety of reasons.

Are they debts to external lenders coming from other governments?

These are debts dating back to 2007 and 2011. I have huge debts reaching 1.2 billion dollars. Thus, approximately $150 million was paid to the Administration fund with the sale. There are dialyzers and Solca in that area. We reached an agreement with Solco that the debt is measured from 2012 to 2022.

How much was the Management fund, and how much was left? Does this sale affect the essential costs of that fund? And, on the other hand, what is the current level of the Health Fund?

There were 550 million dollars in the administrative fund, and now 355 million dollars would remain. The management fund is a building fund. There is no impact because it is money that is not allocated to any care, even though it was invested by Biess. Under the law, $20 million is set aside for maintenance, and $19.8 million is usually returned. Meanwhile, the health fund is $333 million, but when the administration of President (IESS) Alfredo Ortega began, it was $120 million.

Although it is very little, how is the sustainability of this fund guaranteed?

The health insurance fund has several aspects. It depends on two questions: I have internal units and external service providers. There has been an excessive increase in outsourcing providers from 2019 to 2022. During this period, outsourcing providers have grown exponentially. We currently have 467 third party service providers, an increase of 40%.

The rule says that they have to deal with vital issues, like Solca, or dialysis issues, cardiothoracic surgery. This is because a hospital cannot be expected to empty its beds when there is a vital problem. We now have many dental or outpatient providers, which are not vital.

The line followed from the first day in this administration of President Alfredo Ortega was not to increase external service providers, but to improve the work of internal units (HCAM Teodoro Maldonado, José Carrasco Arteaga, Quito Sur, Ceibos, Manta and Machala which they carry 68% of care and 100% of specialties). We have to invest in units, supply them, staff them. If I don’t give money to the hospital, its business will decrease, and I prefer to compensate it to external operators.

Any mode of operation increase external providers and reduce IESS hospital capacity. It’s ugly to say, but it’s the reality. The debt that exists with external suppliers is excessively high. When we started the administration with Ortega, there was a debt of $1.4 billion, we reduced it. We asked to order payment to the providers, for which we hired two external audits in accordance with the law. This is to be able to recover money for the care that the state has to finance, with regard to pensioners.

I remember that other authorities mentioned that in the field of healthcare there is the worst of all worlds: internal units that do not work and suppliers that take a lot of money, and they want to transform that structure. Can it be achieved?

We achieve it. President Ortega is four months into his administration and the products can already be seen. We already have 80% of the drug supply in the whole country. Some large hospitals have 84%. We get it with 30% of medicines. Of course, there are those who still complain about certain drugs and brands, but we have to buy from the electronic catalog.

But how have labor and service provider percentages changed?

As for the work of internal units, it was accepted at 62%, now large hospitals are above 80%. We currently have 467 outsourced providers and have embarked on a 10% reduction nationally. We regulate mutual relations with external bidders. Logic says that work should be optimized and the number of service providers should be reduced. So I’m finalizing a draft resolution for the Board of Directors on how to manage the relationship and set limits. This has an ethical goal of sustainability for anyone who comes into this position in the future. To sit in this position and find yourself with a debt of 1.4 billion dollars is very complex. These are not political decisions, but technical ones.

Despite this structural change, they still have debt. How can this topic be improved?

We also hired an external audit from 2023 onwards. The comptroller’s office just released a report on the Guayas results, which found that outside providers had irregular payments, did not meet quality categories and billed for excesses they did not make. We are now distributing payments for January, February and March 2023, but from a properly revised process.

Regarding the transfer of money from one fund to another, as far as I understand the law prohibits this, how is this done?

Using money from the administrative fund is legal. However, the internal regulations of Biess had to be changed, because this was not done. The ban is for specialized funds, but not for the management fund.