Will it rain in Spain?


First published in ITIJ 97, February 2009


... or will tourism and its related insurance and assistance industries weather the storm? Roger St Pierre investigates

Spain is one of the world’s top tourist destinations and is home to a thriving expatriate community, and as such it is used to processing foreign visitors through its public and private medical institutions. The country’s hospitals are uniformly of a very high standard, and its inbound and outbound assistance market is healthy; but can the same be said of the relationship between these two entities? And what of the growing need for cost containment services in Spain? What is the current situation and how are these industries set to develop in the future?

Viva España

Back in 2001, Spain overtook the US as the world’s second most popular tourist destination, and began closing the massive gap with clear leader France. Since then, the country has dropped back to third place, being overtaken itself by China thanks to that country’s Olympic-led tourism boom, but it still attracts close on 50 million visitors annually. That said, both domestic tourists and visitors are making shorter stays and they are spending less per head.

Besides all these tourists, Spain plays host to a vast ex-pat community – including around half a million Brits and nearly as many Germans. The country is also popular with Dutch and Scandinavian expats – all of whom have led to an increase in the consumption of high-cost medical resources. Given Spain’s huge number of foreign residents, especially along the Mediterranean coast in the regions of Andalucia and Valencia, many Spanish and foreign health insurers offer policies specially tailored for such people. The most prominent Spanish health insurance companies are Adesias, Asisa, La Estrella, DKV Seguros, Mapfre, Sanitas and Winterthur. Prominent foreign-owned companies operating in the country include BUPA International, IHI, Innovative Benefits Consultants and HealthCare International, while brokers MEDexpat and Medibroker market the products of several companies.

However, recent law changes have made private health insurance provision more of a concern than it was previously among the expat community in Spain’s only semi-autonomous region – Valencia. On 8 June 2008, a new provision within the Aseguramiento Sanitario del Sisteme Sanitario Publico de la Comunitat Valenciana governing laws in the region came into force, defining just who is and is not entitled to free medical treatment. Those expats who are in possession of an E121 or who are working and are making social security contributions will continue to be covered, but there are concerns over the new status of the many early retirees who are resident but do not have E121 entitlements and will now likely have to pay themselves for treatment they previously received for free.

"with large tourist and expatriate populations seeking private healthcare, there has in recent times been an increasing concentration of clinics into the aegis of big management groups, who now control more than 50 per cent of hospital activity across the country"

Many expats, however, who have chosen to spend their retirement on the Spanish mainland have settled in the southern Andalucia region. Doctors and medical staff there – like all other regions – are trained to the highest international standards. In fact, recent research indicates a 35-per-cent improvement in treatment standards in Andalucia. Excellent and very well equipped hospitals are to be found across the region’s eight provinces – including Cadiz, Cordoba, Grenada, Màlaga and Seville – and the larger hospitals in the big cities often specialise in specific areas of healthcare and treatment. For example, opened in 1993 and run by an independent company on behalf of the Andaluçian health authorities, the 243-bed Costa del Sol hospital, in Marbella, is typical of the best Spanish hospitals. On average, some 30 babies are born there each month but, given it’s location in the heart of Spain’s sun, sea and sand holiday playground, it’s no surprise that many of the hospital’s patients – 20 per cent and upwards – are tourists or expat residents. Not surprisingly, extra resources, including a volunteer staff of English and German translators, have to be laid on in summertime when the rate of emergencies rises from 140 cases to 355 or more a day. However, unlike many other European countries, in Spain, in-patients’ families and friends are expected in play a part in the hospital care process by taking care of some of the feeding and general care duties and even being required to stay overnight with the patient.

medicalQuality care

Spain’s population is covered for treatment within a high-standard, nationwide public health system (the INSS) and as far as hospital quality, technology and general medical care are concerned, Spain is ranked seventh top nation in the World Health Organisation’s ratings. Even in the country’s rural regions, where general public hospitals are generally found in the provincial capital, hygiene and treatment standards are of a very good standard. Access to care in these areas is an ongoing issue, but one that has been addressed in recent times by the Spanish Institute of Rural Health.

But, as happens in other countries, many people – and in Spain that’s about six million patients – choose to take out a private health insurance policy, in order to avoid waiting list queues and also to provide themselves with a choice of hospitals. A wide range of cover is available, including some less expensive policies that only cover emergency treatment received in the home and/or on the way to the hospital, with the patient remaining responsible for costs incurred at the hospital itself.

Unlike in Britain and other countries where the dentistry and medical care services operate independently of each other, many Spanish health centres have resident dentists who provide free treatment to foreign holders of a European Health Insurance Card, as well as those registered within the Spanish social security system, while private dental treatment is less expensive than elsewhere, with around €10 charged for a check-up and between €40 and €50 for a white filling.

Free to pensioners, medicines prescribed under the social security system are priced at a 60-per-cent discount, while items like antibiotics and asthma inhalers that can only obtained on prescription elsewhere, are sold over the counter at pharmacies in Spain – and are less expensive. The procedure for medicines prescribed by hospital outpatient departments is somewhat more complex. The patient must purchase the medicines from the farmacia then go to his or her own GP doctor with their copy of the hospital notes and the medicine labels to obtain a written prescription. Armed with all this, the patient returns to the farmacia to obtain the appropriate refund, which is then reimbursed to the pharmacist by the INSS.

"Figures released by the Institute of National Statistics show internal clinical management costs to have risen greatly in the past half decade."

Foreigners on long stay or taking up residence in Spain can arrange to be covered long term under the national health system, provided they have paid healthcare contributions in their own country and that country has a reciprocal agreement with Spain. They will, though, need to register with the health authorities, with two copies of form E-121, even if they are in possession of a European Health Insurance Card. They will then be assigned to a health centre doctor.

Health service modernisation has been rapid. In 2006, the ministry of health and social services for the northern Cantabria region, home to the popular city of Santander, contracted iSoft to design and manage sophisticated new software for hospital tests carried out at health centres (Centros de Salud) throughout the region, a project undertaken in collaboration with local companies Indesis Consultoria Saniaria and Loarco Sistemas. The iSoft software allows the monitoring of all requests for tests received from  medical professionals, regardless of whether they work in hospitals or the area’s primary healthcare centres, which are responsible for the wellbeing of some half a million residents.

With an increase in the take-up of private health insurance, and with large tourist and expatriate populations seeking private healthcare, there has in recent times been an increasing concentration of clinics into the aegis of big management groups, who now control more than 50 per cent of hospital activity across the country. Among the key hospital and clinic operators are Grupo Hospitalario Capio in Madrid, Barcelona, Toledo, Badajoz and Albacete; Grupo Hospitalario Quiron in Barcelona, Madrid, San Sebastian, Valencia, Zaragoza and elsewhere; Grupo Nisa in Madrid, Seville and Valencia; the Hospiten Group, with facilities in the Canary Islands and on the Costa del Sol; Gestion Hospitalaria Balaer in the Balearic Islands; USP Hospitales in Mallorca, Barcelona, Madrid, Marbella, Seville, Madrid and other sectors; Grupo Xanit on the Costa del Sol and in Madrid; and Grupo Fermenia in Catalonia and the Costa del Sol.

Of course, with the treatment of foreign patients comes the inevitable issue of repatriation. Spain is thus abundant in companies offering evacuation services. In the Canary Islands, Dr Negrin Hospital, which is one of Spain’s largest university hospitals, has an on-site heliport, which ferries patients into Las Palmas from the neighbouring islands of Fuerteventura and Lanzarote.

"Until recently, 95 per cent of inpatient admissions here were to private clinics, but these days tourist patients are increasingly being directed into the pubic health system"

Helicopteros Sanitarios, meanwhile, provides a 24/7 evacuation service, by road and air, along the Costa del Sol, between the busy resorts of Torremolinos and Sotogrande. Owned by a major Spanish textiles conglomerate, Mayoral Executive Jet, based in the busy resort city of Málaga, has two decades of experience in the air ambulance and sanitary flights business, covering the south of Spain, as well as Morocco, Algeria, Libya, and the Spanish North African enclaves of Cueta and Melilla. And also highly active in the region, and far beyond, is Spain Jet, with its fully equipped Falcon 100, Falcon 200, Piper Cheyene I and Piper Cheyene IIXL air ambulances, working in collaboration with Private Sky Alliance Ltd, a London-based private air charter organisation, offering round-the-clock, round-the-year, evacuation services.

A question of cost

As elsewhere in these tough times, though, cost containment has become a major concern. Figures released by the Institute of National Statistics show internal clinical management costs to have risen greatly in the past half decade. The shortage of qualified doctors, the cost of technological improvements and the incorporation of advanced treatment techniques at the main hospitals across the nation have created an overall cost rise of 10 per cent – way above Spain’s general inflation rate over the past two years. Additionally, there has been a 30-per-cent increase in the average salaries of public sector medical and surgical staff since 2005, and this increase has also affected the levels of medical fees in the private sector where staff costs represent 57.2 per cent of the hospitals’ internal costs.

drinksAdd to this situation, the nature of the relationship between foreign assistance companies and Spanish clinics, which historically has been rather conflictive, and the need for cost containment becomes even more obvious. Key problems experienced by the clinics predominantly relate to the guarantee and payment processes; their main complaint being the delay in the issuance of guarantees and the rejection of cases that have been previously authorised – a situation closely related to the GP check, specific to the UK market. These disputes have led a number of clinics to cancel agreements for those circumstances in which the issue of guarantee is delayed.

The main complaints cited by insurance companies relate to the treatment of non-urgent pathologies, prolonged hospital admissions and high cost per file.

Comments Fátima Guillén Grande of Medical Claims International Spain: “Such disputes, plus the huge volume of potential tourist patients with an increasingly higher average age and a proven over-treatment in both public and private hospitals, make ever more important the role of cost containment companies that have the experience, ability and technology to understand and contain medical expenditure.

“The average medical stay for tourist patients treated in Spain in 2007 was 4.5 days, with a 5.5 day average stay for surgical intervention. This indicates that there are still a number of unnecessary 24-48 hour hospital admissions, which bring down the average median as compared to the average stay levels for the general population.”

Dr Virginia Villanueva, medical director and network manager at Mapfre Asistencia, who spoke at the recent International Travel Insurance Conference in Budapest, concurs: “Hotel doctors are known to alarm patients about ongoing health problems in order to get them to stay in hospital for longer than necessary as they are being paid a commission by the medical services providers. Without close control, bills for treatment, medication and after-care have often been inflated.” She adds: “Where assistance companies are not involved in the management of a case, the bill is often tailored to the patient’s nationality, with Brits and Germans paying the most.”

Speaking at the same conference, Christiane Burniston, chairman and managing director of ChargeCare International, told delegates of the increasing number of European patients being sent to state hospitals by the growing number of companies offering third-party administration (TPA) services in Spain. The problem is, she said, that the subsequent bills sent by these TPAs are relatively very high, and companies looking to make a recovery are often unable to obtain the necessary original hospital invoice required to do so, as the TPA will not allow access to it for obvious reasons.

"The main complaints cited by insurance companies relate to the treatment of non-urgent pathologies, prolonged hospital admissions and high cost per file."

Adds Pablo Gonzala, medical director if MCI Spain: “Until recently, 95 per cent of inpatient admissions here were to private clinics, but these days tourist  patients are increasingly being directed into the pubic health system and it seems that, in future, inpatient admissions of such people to private hospitals will only take place when medically necessary.”

But what of the future of cost containment in Spain? Direct discounts, says Gonzala, will not be possible without the supplier’s permission, payment times will be optimised through the use of online GOPs, and pricing tools and price lists will be more transparent. This, he predicts, will come about through a joint strategy between underwriters, assistance companies, cost containers and loss adjusters.