Why Dirty Business Practices Hurt Latin American Healthcare

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Despite the risks—including billion-dollar fines and tarnished reputations—corruption still plays a significant role in Latin American healthcare systems. Theft, bribery and extortion have led to monetary losses in the billions.

In fact, according to Transparency International’s 2015 Corruption Perception Index, many Latin American countries rank among the most corrupt in the world. The index is based on a score from 0 to 100, with 100 being the least corrupt. Many Latam countries scored quite low on this index due to corruption issues, including Paraguay (27), Nicaragua (27), Guatemala (28), Honduras (31), Ecuador (32), Argentina (32), Dominican Republic (33), Bolivia (34), Mexico (35), Peru (36), Colombia (37), Brazil (38), Panama (39), El Salvador (39).

The only two high-scoring companies on the list were Chile (70) and Uruguay (74), whose scores were comparable to those of the U.S., the U.K. and Japan.

Kickbacks Are Core to Corruption
Much of the corruption that affects Latin American healthcare systems stems from political figures and unethical behavior in the public sector. The prevalence of state-owned or state-controlled healthcare institutions have led to compliance challenges regarding anti-bribery laws, for example:
  • In Mexico, kickbacks on government contracts can reach 25% to 30% of project value in the form of cash and other material goods such as computers, cars, land, constructions, homes and political favors.
  • In Honduras, the vice-president of Congress, Lena Gutierrez, and some of her family have been charged with fraud, crimes against public health and falsification of documents. They are suspected of having links to a company that allegedly embezzled the state by selling poor-quality medicine at inflated prices.  
  • In Guatemala, political corruption in the health system has directly led to the loss of lives. Authorities arrested 17 people, including the head of the Guatemalan Central bank, in an ongoing investigation into fraud at the Instituto Guatemalteco de Seguridad Social (IGSS). The scandal reveals that IGSS employees and the head of the Bank of Guatemala stood to make 15% in kickbacks. These persons have been charged with fraud, bribery, conspiracy, influence-peddling, illegal collection of fees, illicit association and insider trading. Charges of culpable homicide could be filed as the scandal resulted in the deaths of at least five kidney-failure patients.
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Theft and Fraud Also Abound
Beyond kickbacks, other forms of corruption threaten the operations of Latam healthcare. There have been a number of cases of individuals and entities billing the government for services that were never rendered or even selling expired medications in altered packages.

In Ecuador, such behavior has become a major issue for the healthcare system. Guayaquil’s Teodoro Maldonado Carbo Hospital has been one such source of corruption. Here, dozens of tunnels have been used to smuggle medicines out of the hospital for illicit sale.

Even Brazil’s image has been stained by corruption as the Petrobras scandal comes to light, involving both public and private individuals in a multi-million dollar affair that appears to lead as high as the Presidential Office. Impunity at the top enables corruption to flourish.

Combating Corruption in Latam Healthcare and Beyond
While new leaders taking office certainly have the opportunity to effect change that could reduce or eliminate corruption, international agencies and regular citizens can also help combat corruption.
For instance, the World Bank helps countries to appoint high-profile committees to investigate the scale and scope of corruption in their societies, to set priorities for anti-corruption activities and to develop and implement action plans. These action plans are only effective when they receive high-level political assistance and involve the public and media by opening channels for participation.

In addition, organizations such as Transparency International can empower citizens to take action and hold politicians accountable for unethical government acts. Activities such as holding regional workshops have helped equip concerned citizens with new ways to combat corruption, such as survey instruments and citizen initiatives.

Contact Americas Market Intelligence to learn more about the opportunities for companies in the Latin American healthcare market, to garner competitive intelligence or to access our database of more than 12,000 hospitals across Latin America.

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Guillaume Corpart

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