SaludCoop: the biggest scandal in Colombian healthcare system

Six years after it was revealed that the health providing company was embezzling large sums of money, there are still significant inconsistencies 

SaludCoop

In 2011 an embezzlement of public funds scandal shook Colombia up. Six years later, the Saludcoop scandal is far from being finalized, although President Juan Manuel Santos has insisted that his government will not tolerate fraudulent actions. The scandal was inaugurated with an investigation which targeted Saludcoop’s ex-President Carlos Palacino, the former Minister of Social Protection Diego Palacio and former Trade Minister Luis Guillermo Plata, and their connection with Saludcoop, Colombia’s largest EPS company.

An EPS is an Entity for Health Services, acronym in Spanish. These are companies in charge of providing health services to Colombian citizens. Every citizen must have a Mandatory Health Plan, POS, which covers the basic health needs. Citizens can also pay for more insurance if they want to, which is more expenssive but includes more benefits. Saludcoop's scandal showed the corruption that runs inside EPS companies sometimes, because the money that was meant for health care was being embezzled. 

The misappropriated sum is still not well-defined, depending substantially on the reporting source. While President Juan Manuel Santos insists on a striking $2 billion Colombian Pesos (COP) fraud, attorney Jose Luis Mozo talks about investments of COP $321 million in fraudulent social security funds. Saludcoop, the EPS (Entidad Prestadora de Salud) which was reposed by the Colombian government after the launch of the investigation, is now in liquidation, while the chief prosecutor opened criminal investigations against the managers of the EPS.

Although the scandal remained in the media for the past years, the consequences of the fraud are even today widely debated. First of all, there’s the question regarding the intrusion of the managers and their intentions. The general idea is that there was a misuse of public funds but the opinions are divided when we discuss the legal framework and the government’s liability. As some argue, these managers have benefited from the legal loopholes which were abused even in the past when public resources have been allocated by private individuals.

The conflict of interest and intricate relations between Colombian government officials and private power players is yet again proven by the fact that Carlos Palacino was not criminally charged for his wrongdoing, escaping with a simple sanction. The reason behind this action is that Attorney General, Luis Eduardo Montealegre can’t prosecute Palacino, because Montealegre was counselor at Saludcoop. Thanks to this conflict of interest, Palacino found a comfortable exit. Furthermore, his actions pointed out that the system is full of regulatory shortcomings.

When the State Comptroller announced that the losses amount to COP $1,4 billion, it was the government itself who refused to accept the amount asking the State Auditor to invalidate the result of the Comptroller, proving that the government believes that this number is inflated. The government went on to sue the Comptroller, informing that their experts have estimated the prejudice at COP $75,000 million. According to the 94 pages audit delivered by Crowe Horwath CO S.A. the amount under discussion is COP $74,776 million and not COP $1,4 billion (or COP $2 billion as it was later stated). Thus, how did the government arrive to this sum?

It seems that during over six years in which Saludcoop remained under the government’s authority, the debt increased from $74,776 million to over $7 billion, proving that the biggest mismanagement of funds happened while the company was under government’s supervision.

Liquidation of Saludcoop is now under way by an official appointed by de government and it implies that all assets are to be sold in order to pay the creditors but it also indicates that there’s no permanency when it comes to services, and this will impact the members. According to government estimates the money obtained through liquidation will cover the debt and fully repay all creditors, however, by far the numbers again do not match and it doesn’t appear to be the case and certainly it will not repair the Colombian health system.

The issue is that the Colombian government has created a structure by which its auditing of EPS accounts is negligible, while the focus is placed on the promotion of competition. The government hoped that through such liberal practices, wrongdoings would be easily solved by simply selecting a different healthcare provider. Basically, the responsibility of solving crimes, lies with the end customer.

The most worrisome aspect comes while analyzing the services provided by these institutions with hundreds of thousands of denials of POS rights each year. The financial obligations towards public and private hospitals are estimated to add up over 6 billion pesos which again is translated into disastrous services provided to the patient. These debts leave hospitals in shattering circumstances.

Where did the SaludCoop funds end up?

 

Latin American Post | Adina Achim

Copy edited by Laura Rocha Rueda

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