Overall, the economic outlook for Mexico is a mixed bag of positive and negative drivers: continuous -though slow- improvements of regulations and security measures, a favourable unemployment rate, and a low to moderate economic growth rate. Most daunting remain the external factors and global (particularly the US’) trade-regulation impacts. Economic growth will continue to be stimulated through private consumption, higher wages and emigrated workers’ remittances; however, in summary, GDP growth is expected to decline in the coming 2 years and this is further reflected in a slight decline in healthcare spending.
Introduction and macroeconomic overview
Mexico is a federation comprising 32 states, one of which is a Federal District and the capital city. It is the 11th most populated nation in the world, with around 129 m inhabitants, and a GDP of €812.6 bn. In Latin America, Mexico is the second largest economy (Brazil being the largest), and in regards to its GDP/capita of €8,572, it performs in the upper quartile.
Healthcare expenditures in Mexico
Mexico’s healthcare expenditure in 2016 as a percentage of GDP was 6.5%. This is below average for a Latin American country, where mean expenditure is 8% of GDP. In comparison, Brazil spends 8.5%, Chile spends 8.3% and Argentina spends 4.2%. Compared to the EU, it is much further below the typical expenditure range of 9-13%.
In terms of GDP per capita, Mexico spends €524 per capita, compared to €665.5 in Brazil or €567.7 in Argentina.
Around 52.3% of healthcare costs are financed publically and 47.7% is sourced privately. This is a relatively average split of healthcare expenditure when compared to other Latin American nations such as Argentina, Brazil and Chile (but notably below that of Colombia, which has a 75-25% split). In the EU and other highly developed nations, this split is typically around 75-25% (plus minus 10%).
91% of private expenditure in Mexico stems from OOP patient contributions.
Financing of the Mexican healthcare system
In 2016, a total of €60.52 bn was spent on healthcare in Mexico. Of the total expenditure, 52.3% is sourced publically, and 47.7% is private.
Social Security schemes cover 27% of the total public expenditure, and the publicly subsidized system accounts for about 25.3%.
All social security institutions in Mexico are funded by 3 main sources:
- The federal government
- Employers (including federal, government and local)
- Household contributions from employees
State financing of healthcare providers is calculated based on historical budgets rather than on projections of the services that will be provided or the volume of patients being served.
Social Security institutions in Mexico act as both payer and as providers of care, i.e. they own and manage their own hospitals and networks of care providers.
From all the funding that the central government sends to the states for the purpose of providing social security for their populations:
- 40% is used to contract medical professionals and administrative staff in medical facilities
- 30% is used to purchase medicines
- 20% is used for preventative medicine
- 6% for the management/organization of the Seguro Popular in each state
Non-public sources provide about 48% of health expenditure, 91% of which is out-of-pocket spending.
Private insurance accounts for approximately 3% of total private financing.
Public hospitals receive their funds from:
- The Mexican government
- State governments
- Treating private patients.
Private hospitals (including freestanding ambulatory day centers) can be either for-profit or non-profit, and their income is derived chiefly from patients with private health insurance.
Financial Flow (2017)
The flow diagram above illustrates the financing sources and where their contributions and spending flows to, i.e. to fund public insurance/social security funds, and to procure and remunerate healthcare providers/facilities.
The acronyms (IMS, ISSTE, PEMEX, etc.) represent the principal social security funds in Mexico.
Can Mexico’s current healthcare challenges be turned into business opportunities?
As in many modern societies, Mexico suffers from a rise in complex chronic conditions and must seek ways to manage long-term illnesses and the elderly care successfully and affordably. Mexican healthcare is also challenged by exceptionally high and rising numbers of obesity; worryingly so, obesity is also very prevalent amongst children.
Furthermore, low patient-to-doctor ratios, continuously increasing expectations from the population regarding healthcare, and extremely high out-of-pocket spending from individuals, are also factors to be looked into and ameliorated, in order to boost the quality and accessibility to healthcare in Mexico.
The Ministry of Health is looking into ways to address several of these challenges, and also into promoting public-private collaborations to bridge gaps in provision and financing.
Some other challenges facing the Mexican healthcare system are:
Shortages of prescription medicine
- 1/3 prescriptions prescribed in the SP cannot be delivered due to shortages in the stocks; these are then delayed or an alternative treatment must be found.
Weak quality management and monitoring
- A lack of patient registration systems, HC-IT and other HC-supportive management applications make it difficult to make studies to monitor –and accordingly improve – Mexican healthcare services, treatments, and the efficiency of structures.
High volumes of informally employed workers
- These workers fall outside of the scope of the social security system for formally employed Mexicans. Accordingly, they are not and cannot be -as per regulation- charged through their employment to contribute to the social security fund to help finance the national healthcare system.
Fragmented healthcare provider networks
- The fragmented structure resulted from a hierarchical and historical development, and not as a deliberated design aimed at efficiency and maximizing accessibility.
- Crossovers between insurance/SS networks are structurally not encouraged, reducing the opportunities for maximizing resource use and care track efficiency as well as availability.
- Since the healthcare coverage that a Mexican resident is entitled to and subscribed in is directly dependent on the type of employment they have, Mexicans that change jobs, often also have to change doctor. An OECD study estimates that 30% of individuals in Mexico change doctor annually solely due to changes in their employment category, causing widespread disruptions in the continuity of care and doctor-patient relationships, as well as resulting in efficiencies/waste in the care delivery.
- Patients’ choice to select a particular insurance scheme, doctor or facility is also highly limited, since they are bound by that which is available within their prescribed healthcare network.
Uneven access to healthcare
- Sparse availability of HC in remote areas, paired with concentration of HC skills, resources and facilities in highly populated and urban regions.
- Healthcare spending is below the OECD average.
- Inefficient spending on administrative costs – close to 9% is spent on administrative costs of the THE in Mexico.
- Reserves of the Social Security fund are low and the sustainability of ongoing public healthcare financing is under threat
- A near 50% private spending on healthcare, where over 90% stems from OOP, is extremely high, when juxtaposing to developed nations. However, in comparison to other more developed Latin American nations, this 50-50 split is not uncommon and Mexico in fact has a slightly higher public spending share than Argentina, Chile and Brazil. Regarding the private OOP spending, Mexico easily exceeds that of its regional peers, in some cases representing twice the amount that other Latin American HC users pay.
For further quantitative and qualitative information on the Mexican healthcare system – or on any other healthcare system of over 40 select countries – and their macroeconomic climates, please look into our Business intelligence platform or order the corresponding Healthcare Scan incl. Surgical Procedures Volumes (all specialisms) – product license containing volumes of 984 surgical procedures in 13 specialisms. (The Mexican report is expected to be updated and ready for publishing July 2017.)
Other licenses to our business intelligence platform customized to your needs are also available.
Want to learn more about the Mexico Healthcare Industry Market?
Leave your details here and we will contact you on the same day.