14 of 16 hospitals in northern Colombia state on verge of bankruptcy

Posted on Mar 26 2014 - 6:28pm by Rico

Almost 90% of the hospitals in one northeastern Colombia state face the immediate threat of financial insolvency, according to local authorities.

La Guajira Health Secretary Jorge Juan Orozco told Caracol Radio Wednesday that of the 16 public hospitals in his state, which borders Venezuela on Colombia’s Caribbean coast, 14 may soon be forced to close due to rising debts.

The $90 million in unpaid wages reportedly owed to hospital employees, moreover, has badly strained relationships with the state’s health sector labor groups.

Hospital managers and one statewide health workers union have reached a seemingly intractable impasse, as the hospitals apparently do not have the resources necessary to settle their debt to their workers, or cover the deepening gap between hospital operating costs and incoming revenue.

“Even if we added all our [national funding], we still couldn’t pay the union’s claims of liability,” said Orozco.

April 3 is the date set aside for the start of negotiations between the state government and health workers, after the union in question presented Governor Sugeila Oñate with an ultimatum.

Secretary Orozco maintained that the union’s current demands are unfeasible, given the current financial situation of the sector. The only solution, he said, is a reduction of the debt, which could allow the state of La Guajira to reach an agreement on aid with the national Ministry of Finance and Public Credit.

The plight of La Guajira’s hospitals is only one example of a broader financial crisis. Brought on in part from the massive mismanagement of public funds by private intermediary service providers (EPS), Colombia’s health system is operating under severe budget deficits across the country.

The national health workers union went on strike last August, protesting similar circumstances as those faced by the La Guajira employees, including unpaid wages and overdue or missing benefits. After over one month of partial work stoppages, however, the union failed to force any concessions from the national government.

MORE: Colombia govt transfers funds in face of hospital debt crisis

The national government recently transferred funds to save 14 hospitals in Bogota in an effort to stave off bankruptcy. The Finance Ministry claims it will be taking similar action with all public hospitals in the country.

MORE: Bogota hospitals at risk of bankruptcy to receive govt help

At the urging of President Juan Manuel Santos, Colombia’s Congress attempted to pass a broad health reform last year, but the bill has since stalled. The bill’s detractors have repeatedly claimed the reform fails to address some of the most significant issues in the health care system, including the role played by the EPS intermediaries, which have been involved in large-scale embezzlement scandals and whose function would be maintained under the new statute.


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