Colombia Intervenes in Sanitas, the Second Largest Health Care Company

The Colombian government has stepped in to manage Sanitas, the country’s second-largest health provider, due to ongoing financial difficulties. This intervention comes after months of fiscal instability for the firm, which is owned by a Spanish parent company. Sanitas has been a key player in Colombia’s healthcare sector for over three decades, serving approximately 5.7 million people and establishing a strong presence.

The economic troubles facing the insurer are linked to the broader issues within Colombia’s health system, established around thirty years ago. Currently, there is ongoing debate in Colombia’s Congress about overhauling this system, but lawmakers have yet to reach an agreement.

Colombia’s health service primarily relies on state funding. This involves the government allocating funds to private health firms known as Health Promoting Companies (EPS). These EPS firms act as intermediaries, channeling resources to the actual healthcare providers, referred to as Service Providing Institutions (IPS). According to official data, Sanitas was allocated 7.5 trillion pesos up to 2022 but incurred losses of 295,368 million pesos. The total debt of the company reached around 2.3 trillion pesos.

The public authority that yesterday decided the intervention in Sanitas stated that the measure was taken to “avoid the economic collapse to which the EPS was heading”.

Decline of Sanitas

In November 2023, the Minister of Health, Guillermo Jaramillo, pointed out that this EPS is one of those that receives the most resources. According to the minister’s data, between 2019 and 2023, the state transferred more than 31 billion pesos to it. “However, they continue to insist that they have no money,” said the minister.

Jaramillo explained that EPS Sanitas does not comply with the reserves or equity, “despite the fact that said EPS is part of a financially successful business group, which has businesses and hospitals in several parts of the world and reports large profits”.

Sanitas has already experienced an important crisis, a prologue to the current one, with the medicine dispensing service, when the pharmaceutical company Cruz Verde decided to stop supplying the users of Sanitas, claiming non-payment from the latter. Finally, the State and the company reached an emergency solution that has only prolonged the agony.

The Minister of Health wanted to convey “peace of mind” to Sanitas users. In an official message, government sources assured that “services will continue to be provided without inconvenience”. Minister Jaramillo emphasized that “the purpose of the intervention is to correct situations for the benefit of Colombians”.

System-wide crisis

The public intervention in Sanitas is evidence of the crisis that the entire Colombian health system is going through. In July last year, the main EPS companies informed the government of their difficult financial situation, warning that without a greater economic injection from the State, they could collapse. Compensar, Sanitas, and Sura, which have 13 million users, indicated then that without more resources, they would not be able to operate beyond September 2023.

During the following months, the crisis unfolded in chapters: the private companies demanded payments that the State supposedly owed them, while the State, through the Ministry of Health, affirmed that it was up to date with its economic obligations to them.

This alarming situation occurs in the context of the political debate on the new health system. The government’s proposal to eliminate the EPS as mediators of a service paid for by the State, favoring public management, does not have enough political support to prosper for the time being.

In a heated debate, the opposition accuses the government of doing nothing to avoid the bankruptcy of the current system, in order, they say, to favor its proposal for a system giving greater responsibility to the public sector.

The never-ending story

This is not the first public intervention in a private insurance company. Although the system has been in existence for thirty years, in the last four years alone, a total of 13 companies have disappeared.

All of them went through a process of State intervention and, after finding it impossible to continue operating, they were liquidated and the users were absorbed by other companies. In total, almost six and a half million people had to change their health insurance company due to the disappearance of their EPS.

However, Sanitas has a volume of users close to six million, so a supposed relocation is estimated to be complex, as the transfer would have to be made in a short period of time and the companies that have managed to survive are at saturation point. Currently, 29 EPS are providing services to millions of patients and several of them had to assume the provision of services to users who were affiliated to the liquidated entities.

President Petro justifies the decision

The president of Colombia, Gustavo Petro, last night justified his government’s decision to intervene in Sanitas last night. In a comment on social networks, the head of state followed the line of the Minister of Health, sending a message of tranquility to the EPS users. “Both Sanita’s health providers and affiliates will continue with their health services and payments up to date,” wrote the president.

Petro took the opportunity to respond to critics of the decision, the conservative opposition, and former president Alvaro Uribe. “Do not let yourselves be misinformed by irresponsible ex-officials who took a copy of the database to deceive,” he warned.

The political opposition took advantage of the situation to attack the president and his reform proposal. In this sense, former president Alvaro Uribe (2002-2010), who was the standard-bearer of the current health system during his time as a senator, accused the current government of forcing the Colombian health service into bankruptcy.

“By hook or by crook, it seems to be the official design for the citizens to be left without good health insurers and, in the end, only with statism, bureaucracy, and politicking,” said the former president, who also asked rhetorically about the future of the private sector and the credibility of the Colombian system: “Who in the private sector will invest again to provide health services?

Faced with a barrage of criticism from the political opposition, President Petro came out to refute Alvaro Uribe. “No statism, dear former President Uribe: all the clinics, hospitals, and clinics that Sanitas used to pay with public funds will continue to be paid with public funds, that is to say, they will grow,” said the head of state, assuring continuity in the provision of services to the citizens.