On May 30, Fonasa commissioned a study to evaluate the probability of insolvency and financial health of the isapres, within the framework of the processing of its Short Law and the recent judicial rulings that may affect its economic viability. The analysis will use financial methodologies and statistical models such as Altman Z-Score and Ohlson O-Score to measure solvency, liquidity and profitabilityand to carry out simulations of economic scenarios.
The short Isapres Law was approved last May 12 by both the Senate and the Chamber of Deputies, and is ready to be promulgated by President Gabriel Boric. The regulations seek to resolve the enormous debt of private health insurers, estimated at approximately US$1.25 billion, caused by excessive charges to members. Also establishes a term of 13 years for the return of these amounts and allows an extraordinary increase of up to 10% in health plans for this year, with additional increases until 2027.
The study is carried out by the academic of the Faculty of Economics and Business (FEN) from the University of Chile, Leonardo Torres. Under the contract, the auditor will produce two reports: one on the historical financial health and another on the current status and likelihood of insolvency. The work is crucial to anticipate and manage the effects on Fonasa and ensure the stability of the Chilean pension health system.
The reasons that lead Fonasa to commission this study include the need to understand the financial impact of the Short Isapres Law and the court rulings of 2022 and 2023, which force the Isapres to comply with certain regulations that could compromise its viability. This anticipatory analysis is vital to evaluate the implications of these changes on Fonasa, particularly in terms of the possible migration of beneficiaries from the isapres to the public system, and to prepare measures that ensure continuity and efficiency. of the public health service in Chile.
The study has a maximum period of 30 calendar days to complete the work, counted from the acceptance of the purchase order issued on May 30, 2024. During this period, partial advances must be submitted every 10 days. The service will be structured into two main reports: the first, which analyzes the historical financial health of the isapres, and the second, which provides an analysis of the current status and probabilities of insolvency. This deadline structure ensures continuous monitoring and allows for quick adjustments in response to any technical or administrative observations by Fonasa.
On March 31, the director of Fonasa, Camilo Cid, sheld in conversation with Third that “we have to be prepared for all scenarios and an isapre going into insolvency could be one. That is why people have naturally migrated to Fonasa. In the past it was said that people fell for Fonasa, today they are choosing it, and those who come from the isapres are younger people than before. This happens because they see in Fonasa a more economical possibility of accessing the same providers.”
From Fonasa they explained that “with the enactment of the so-called Short Law, this work has intensified, requiring robust information for the analysis of the context, given that the law instructs Fonasa to implement the Complementary Coverage Modality, also considering the obligation to grant continuity of care for people in specific cases, such as GES guarantees, current CAEC or court rulings or resolutions of the Health Superintendency, given the possibility of insolvency of their original insurer.”
“In that sense, the study along with others seeks to provide elements that Fonasa is analyzing for the correct application of the law and thus be prepared for different scenarios. In this particular case, it is a standard study, which in technical terms is called “financial distress” of the private health insurance sector in recent years, which will be carried out with public information available to the Superintendence of Health in their website. “Financial distress” is defined as a situation of financial pressure, referring to the condition in which a company or institution faces significant difficulties in meeting its obligations. This is fundamentally related to the causes of economic factors linked to the economic cycle, economic shocks, financial management, unexpected expenses or incidence of external factors, changes in regulations, unfair competition or litigation,” they added.
According to the same agreement, the chosen academic has vast experience in financial analysis and consulting, having worked on various studies related to the solvency and financial health of institutions in the health sector. His expertise in the application of financial and statistical models to assess the economic stability of complex organizations has been instrumental in previous projects, making him the ideal candidate to carry out this critical analysis. His professional career includes conducting detailed analyzes and preparing reports that have contributed significantly to strategic decision-making in the field of pension health.
The consultancy commissioned byr Fonasa to Leonardo Torres Its objective is to carry out a financial, regulatory and strategic study of the open Isapres. This study includes a detailed financial analysis using financial ratios to evaluate the solvency, liquidity and profitability of the institutions. The contract has a cost of 120 UF ($4,499,628).
An analysis of the market environment will be considered, evaluating the position of the isapres compared to its competitors, as well as the impact of economic conditions and government policies on its viability. External events such as legal problems and changes in legislation that may influence the financial stability of the institutions will also be reviewed. The evaluation of corporate management and strategies will include an analysis of strategic decisions and the quality of the management team to face financial difficulties.
