Working the Angles: InnovaCare in Helping Puerto Rico Overcome Healthcare Burdens

A crisis continues to unfold in Puerto Rico long after the landfall of 2017’s Hurricane Maria. While Puerto Ricans and a host of relief workers strive to restore power and revamp dilapidated homes and businesses, the looming crisis focuses on money and medicine. Essentially, Puerto Rico is struggling to keep up with its astronomical Medicaid expenses. Is there light at the end of the tunnel? Yes. With lean, well-regarded Medicaid providers like Innovacare making inroads into Puerto Rican markets, the potential for financial stability for the U.S. Territory is no longer a pipe dream. Further, with well-qualified professionals like Penelope Kokkinides and Rick Shinto running A+ insurance outfits like Innovacare, it seems that the right people are in the right places to fuel Puerto Rico’s recovery.

By the Numbers

In a recent expose featured by both National Public Radio and the Washington Post, reporters Sarah Varney and Carmen Heredia Rodriguez of Kaiser Health News detailed the dire fiscal environment in Puerto Rico. “The government here needs to squeeze $840.2 million in annual savings from Medicaid by 2023, a reduction required by the U.S. territory’s agreement with the federal government, as the island claws its way back from fiscal oblivion. Overall, Puerto Rico faces a crushing debt of more than $70 billion –much of it due to the territory’s large Medicaid expenses. That’s on an island where the average household earns $20,000 annually and diabetes and hypertension are widespread.” Indeed, the rub with Puerto Rico is the astronomical need and the dismally low personal incomes. If public programs are unable to bridge the gap between income and need, who is going to pay for the care?

For physicians like Jaime Torres, who serves as a regional director of the Department of Health and Human Services, the financial woes in the healthcare sector of the Puerto Rican economy are contributing to a growing state of panic. “We are rearranging the chairs on the Titanic,” notes Dr. Torres, who recognizes that the aftermath of the 2017 hurricane season has certainly exacerbated an already tenuous situation. “These people who have been under our service for the last four or five years –all of a sudden I have to abandon them,” adds Dr. José Joaquín Vargas, president and chief medical adviser for VarMed, who laments that cuts and limited dollars mean a decline in services for the patients who truly need extensive healthcare services.”

Indeed, the issues are complicated. To maximize the services that high-quality insurance providers like Innovacare deliver to Puerto Rico, professionals like Penelope Kokkinides and Rick Shinto must find creative ways to effectively deploy Medicaid dollars that are increasingly dependent on territorial funding. As Varney and Rodriguez report, Puerto Rico does not enjoy the same level of federal support as U.S. states. “If Puerto Rico were a state, the federal government would pay 83 percent of its Medicaid costs. (It pays upward of 70 percent of Medicaid expenses in 10 states, according to a formula that takes a state’s economy into account.) But because of a 1968 law capping the amount of Medicaid money Washington sends to U.S. territories, the federal government pays only about nineteen percent of Puerto Rico’s Medicaid costs, and as a fixed annual payment, or block grant.”

“The main issue is that we are not yet a state,” says Rep. Jennifer González-Colón, who currently serves as the island territory’s non voting member of U.S. Congress. Puerto Rico must pay for Medicaid, she adds, “with local funds that we don’t have.”

Varney and Rodriguez note that lawmakers in Washington have made some attempts to bolster support to Puerto Rico. “In February, Congress approved $4.8 billion in additional funds to help pay the island’s Medicaid bills. But the additional payments are widely viewed as a stopgap measure; health economists say that extra money is likely to run out in September 2019, a grim estimate shared by the territory’s fiscal oversight board. That’s a federal control board established by Congress in 2016 to oversee Puerto Rico’s budget, negotiate with its creditors and help restructure at least some of the island’s debt.”

Territorial Initiatives

In what may undoubtedly provide a multiplier effect to the federal government’s initiatives, Puerto Rico’s territorial government continues to look at ways to cut costs while expanding services. One approach focuses on breaking down old monopolies and replacing them with efficient providers and insurance alternatives like Penelope Kokkinides’ and Rick Shinto’s Innovacare. “Gov. Ricardo Rosselló’s administration aims to reduce Puerto Rico’s Medicaid spending and improve access to care by putting an end to years of regional monopolies by private health insurance companies. The insurers have locked patients into narrow networks of health care providers. Later this year, under Rosselló’s plan, the companies will be forced to offer island-wide insurance plans and compete for customers.” Of course, Washington continues to keep a watchful eye on this and other initiatives. A fiscal oversight board, established by the U.S. Congress in 2016, reviews Puerto Rico’s balance sheet on a regular basis. “We do not have the luxury of continuing to spend inefficiently,” notes Ángela Ávila Marrero, executive director of Puerto Rico’s Health Insurance Administration.

Indeed, the failure of territorial initiatives could trigger a collapse of the entire healthcare infrastructure in Puerto Rico. As reported by Varney and Rodriguez, soon far-reaching cuts may be enacted if Rosselló’s plan falters. “If Rosselló’s overhaul fails to achieve adequate savings — as most observers predict –drastic cuts are in the offing. Some 1.1 million Puerto Rican residents on Medicaid – out of 1.6 million enrollees –are at risk of losing coverage next fall, their health held hostage to the island’s need to pay back its crippling debt. Puerto Rico’s government effectively defaulted on more than $70 billion in debt. Economists blame a decades-long recession, a corporate tax break that ended in 2006, and reckless spending by a bloated government.”

Years of Pain

Innovacare Health

While outside observers may be quick to pin Puerto Rico’s healthcare hardships on the acute circumstances following Hurricane Maria, the pain has been decades in the making. As reported in the recent Washington Post article, many observers saw Puerto Rico’s troubles as they approached.  “Puerto Rico’s health care system was already convulsing in September 2017 when Hurricane Maria struck. The federal government had issued warnings that the island would soon run out of additional Medicaid funds provided by the Affordable Care Act and 900,000 Puerto Rican residents would lose coverage.” Ironically, the federal government has exacerbated the situation by relegating Puerto Rico to second-class status when it comes to underwriting medical costs. As reported in the Post, being a commonwealth of the U.S. does not entitle the territory to state-level benefits and services. “Footing medical bills without the kind of federal assistance dispensed to states has effectively doomed the island’s fiscal health, health economists say. Researchers of health care say that, putting aside interest on Puerto Rico’s debt, the territory’s primary fiscal deficit would have been erased had Congress paid the same share of Medicaid bills that it pays the 50 states and Washington, D.C.”

Compounding the crunch, Puerto Rico has a huge segment of the population entitled to public insurance. With one out of every two Puerto Ricans qualifying for this type of care, the annual public costs are staggering. In 2016, for example, Medicaid expenses in Puerto Rico totaled $2.4 billion. Add an aging population to the mix, along with staggering rates of chronic conditions like asthma and diabetes, and the annual cost of coverage will continue to skyrocket. While outfits like Innovacare have a demonstrated aptitude for success in dire settings like those in Puerto Rico, old healthcare structures and alliances are slow to give up their holds on care monopolies. Although empowering topflight executives like Penelope Kokkinides and Rick Shinto and the Innovacares of the industry with more maneuverability in Puerto Rico would positively impact the island’s healthcare malaise, transformation has a delayed arrival. Further, low repayment rates stagger the work of strong providers like Innovacare

Cash flow is another chronic concern. Money the federal and territorial governments funnel into public healthcare is often delayed or derailed before hitting the bank accounts of providers. “Insurance companies, hospitals, and physicians complained that the government was chronically late paying its bills. That frustration forced hospitals to defer maintenance and investments in new technology and fueled the exodus of thousands of physicians to the mainland in search of better incomes.”

Perhaps most unsettling is Puerto Rico’s longtime issue with delayed healthcare services. One pediatrician laments that his patients are put in untenable situations because of delays in services.

“If your kid needs a neurologist, for example, the waiting period is around six to 12 months,” said Dr. Jorge Rosado, a pediatrician in San Juan. “For a genetics specialty, it’s two to three years.” Other providers worry that staggering costs and slow repayment will perpetuate the delay of appropriate treatments and jeopardize the assurance of excellent outcomes.

A Path Forward

For Innovacare leaders Penelope Kokkinides and Rick Shinto, along with other healthcare professionals concerned about the state of medicine in Puerto Rico, the path toward fiscal health and excellent quality of care is a tedious yet realizable path. The healthy path must begin with a revisit of reimbursement rates. As the Post article suggests, a deconstruction of monopolies will force insurers to move toward efficiency. “Puerto Rico has long capped monthly payments insurers receive for Medicaid patients regardless of how many medical services they use, a form of managed care. But the government here believes that the insurers –without their regional monopolies –will be forced to compete, offering better care and more efficient delivery. They could save money by reducing unnecessary emergency room visits or hospital stays and by negotiating discounted payment rates to providers.” In dealing with individuals’ chronic conditions, the government’s move toward restructuring also comes with the promise to elevate Medicaid reimbursement. “The island’s government has vowed to pay private insurers extra money to care for those with expensive or chronic medical conditions. Insurers have cautiously welcomed the changes.”

Innovacare Rick ShintoInnovacare CEO Rick Shinto joins other professionals in adopting a cautionary response to proposed interventions. “I support the government on what they’re trying to do, but they didn’t price it properly,” notes Shinto, adding that “the oversight board is fixated on cuts, but we’re never going to improve healthcare unless more money is put into the system.” In response to concerns raised by insurers and others, Puerto Rico’s government insists that Puerto Ricans, especially in the metropolitan area around San Juan, will have access to additional specialists and treatments not currently accessible. Many Puerto Rican providers are quick to challenge the government narrative, arguing that it’s hard to imagine additional services when clinics and hospitals are still struggling to emerge from Hurricane Maria’s impact and expense. Hospital General de Castañer, for example, is but one of many outfits forced to pump tremendous cash flow into contingency expenses resulting from hurricane impacts. “Hospital General de Castañer spent $5,000 every five days for gasoline to power the generators at its three sites for seven months; Health Pro Med, a community health center, spent at least $2,000 a day in added expenses, including private flights to ferry doctors to the storm-battered island of Vieques.”

Again, there is the added concern of poverty impacts. What about Puerto Ricans scattered in storm-impacted towns across the island? Will government calls for monopoly dissolution and healthcare efficiencies leave the poorest Puerto Ricans in the dark? The Post article brings up a scenario that encapsulates the concern. “Many experts are skeptical that managed-care companies will hire the army of social workers and nurses like Calderón needed to trudge up hillsides, knock on doors, and do the tedious work that entails solving the daily problems of poverty. Viewed through a narrow lens, with an eye for cutting expenses, such problems can seem far outside the purview of medicine.” As Innovacare leaders Penelope Kokkinides and Rick Shinto can attest, displacement of hurricane victims adds to the current air of uncertainty. How do you provide medical services to individuals displaced by disaster?

“Many people displaced by the storm haven’t yet been able to return home, and that, too, can complicate health care delivery. Carmen Ramos, executive director of Redes del Sureste, a conglomerate of 22 medical groups in Puerto Rico, says 60 percent of the letters she recently sent to patients on her mailing list were returned.” The issue of displacement is especially irksome for providers and insurers who need to have clients to keep their businesses moving forward. “The managed-care companies need to produce revenue,” notes one concerned executive who works for a provider of social and health programs for the chronically ill. “That’s a setup for concern.” For Jaime Torres of Health and Human Services, the issue and solution reside with the U.S. Congress. “The economic overhaul doesn’t rectify Puerto Rico’s fundamental problem –it can’t sustain its Medicaid program so long as Congress treats the territory differently than it treats states.” Torres plans on initiating definitive action. “Next year, we will go back to Congress demanding the funding we deserve as U.S. citizens,” he insists, adding that “it’s time the local government started thinking about a Plan B.”


While the government, insurers, and health care providers continue to ponder a healthy course correction for Puerto Rico’s funding challenges, outfits like Innovacare cultivate support for Puerto Ricans in the background. In the weeks following Maria’s landfall, Innovacare raised $4 million in direct relief for islanders.

CareOne Starry Night Masquerade to benefit Puerto Rico
CareOne Starry Night Masquerade to benefit Puerto Rico

Innovacare’s  “Starry Night Masquerade” charity event held in New York City was one of the major fundraising efforts initiated by the insurance provider, bringing together over 900 stars and philanthropists for Puerto Rico. “This event was a special opportunity to show the people of Puerto Rico what they mean to us,” noted Rick Shinto. “For more than a decade, these people have turned to Innovacare, and our subsidiaries like MMM Healthcare and PMC Medicare Choice, to help them stay well and maintain a high quality of life. Now they need us more than ever, and I’m inspired and humbled by the way the Innovacare family has responded.”

Innovacare’s Chief Administrative Officer Penelope Kokkinides added that her company’s response to challenges in Puerto Rico speaks to its deep commitment to the communities it serves. “The people of Puerto Rico – including thousands of our employees and hundreds of thousands of our members – are experiencing devastation and destruction like they have never seen. Although we know an enormous amount of work lies ahead, it has been uplifting to see what a difference our organization is already making in the lives of those in need. The response from the entire organization speaks to the supportive, accountable culture that defines Innovacare.” Puerto Rico faces mounting challenges as it handles ongoing hurricane relief and long-term challenges in healthcare costs. The good news? Lots of folks are looking for a workable solution. Most are confident that a solution will materialize.

Medical Daily Times previously covered Innovacare Initiatives in Puerto Rico in July 2018.

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