Economic Behavior Emerging from a Transformed Structure underlying the Puerto Rico Medical Center System

           A Proposal : Transformation of the Puerto Rico Medical System Model and  Economic Results 

Revised August 28, 2017

Nilza I. Cruz Ruiz

939-644-7683

    
"There is a gap between appearances and reality. The degree
of catastrophe is increasing"  - Nilza I. Cruz

During the past weeks, I have written about Complex Systems, what
characteristics these systems portray, and most important: emerging results
that in the case of the Puerto Rico Medical Services Administration, are no 
surprise, that is; given the existing landscape. One that hasn't changed for at least
the past thirty (30) years.

It is time to focus on changing the underlying structures that give rise to existing

emerging results. Health services are critical and essential.

We need to create new conceptual models, validate with "real world" circumstances, and implement them.

The Alternate Model should  promote forecasting results, in addition to data intelligence and levels

of adaptiveness. Management is not about reacting  to situations and taking action (s),

it's about  continuously creating and validating new models within the health sector based on

technology, sustainability, interrelations, accountability, big data, and data intelligence.

All, strategically centered on promoting the best patient care focused

on prevention, in a non political manner. We have the tools and top health related and

professionals from the social sciences and humanities to  comply with this goal. 

I. Introduction

As former General Administrator for the  Puerto Rico Administration for

Medical Services(ASEM)  for the period of  2013 to 2016, I was able to

dive into and navigate within the system's complex and challenging structure,

social system, financials and operations.

Therefore  understanding the underlying factors and

variables that drive this health system, emerging in unsustainable economic results.

You see, the saying the "detail is in the devil" is completely true!

This provided me with the  motivation of complementing my academic back round in

pure mathematics, statistics, probability, information theory and business

administration with complexity science and related agent based modeling.

This, with the motivation of assessing existing landscapes and creating baseline financial scenarios

in order to research alternate models within different organizational landscapes that

could lead our healthcare system and patient care to the next level;

especially in the government sector in which we are presented with true challenges.

The current government health system is operating on a day to day basis,

with cash flow and liquidity constraints, along with debt-services accumulation 

which is escalating exponentially.

II. Context

  

Today's presentation will consider the following core concepts  within the Complexity Science and Agent Based Modeling (within complexity) schools of thought:

      

       1. Emergent Phenomena,  is how we describe the organized pattern that results from interactions of the distributed agents within the system. For the purposes of the following study, the "system" is the Puerto Rico Medical Center System (PRMCS). The organized pattern will be presented in terms of it's economic results for the past fifteen (15) years, present [FY 17, (considered  the baseline] and projections for the next ten (10) fiscal years should the structure of the existing system and its underlying components remain unaltered. Agents are represented by the PR Department of Health, Administration for Medical Services (ASEM), PR Medical Science Campus, the Hospitals within the Medical Center [Trauma Hospital (under ASEM governance), University Adult District Hospital, Pediatric University Hospital and the Cardiovascular Hospital] ,  and Financing Methods (Universal Third Party Payer System, State Contributions, Federal Medicaid and Medicare Contributions and variances). Each agent is guided by sets of rules, regulations, and strategies. Also, there are levels of agents within each agent . For example, within each hospital, there are departments, and within each department, there are employees. Most of the hospitals, are under the governance of the Department of Health (agent), and this agent is under the governance of the Governor of PR. And yes, each "agent-sub level" also follows different sets of rules and often strategies as well. 

       2.  Structure, rules, interrelations and feedback at the micro-level lead to an emerging pattern (in this case, economic) at the  macro-level.

III. Operating Results for the Puerto Rico Administration for Medical Services (ASEM) -  1993 - 2015*

 *even though these results correspond to ASEM, the research findings and results below correspond to the Puerto Rico Medical Center System as described . Sources of data : audited financial statements and Meditech Information System .

IV. Baseline Study Regarding existing Puerto Rico Medical System Structure:

 * Sources of data: Audited financial statements, Meditech Information System, PR Office of Management and Budget

Key Research Findings

• Since its inception, the Puerto Rico Medical Center (PRMC) has failed to incorporate a business model that could fulfill its economic commitments.
• The solution proposed by various administrations has been the integration of some government hospitals that make up the PRMC
• under the assumption that a single governance and certain economies of scale (not specified) could solve the situation.
• However, even with the intended integration the financial projections for the next ten years (10), suggest a fiscal gap of five hundred
• and sixty million dollars ($560,000,000), assuming the present time organizational DNA of the PRMC within its baseline
• (includes service debts-GDB loan).
• The baseline results reflect the need to substantially decrease the number of patients by one hundred and sixty six thousand two  hundred and sixty four (166,264) or eleven percent (11%) for the described period. This, to balance the budget without additional economic resources from the local or federal government. The percentage (11%) will increase should ACA funds decrease by one billion ($1,000,000,000) and/or the baseline structure is not transformed.
• Accumulated debt services (excluding GDB loan) plus losses are projected to escalate to more than one billion dollars ($1,000,000,000) by 2027, assuming the same historical liquidity dynamics based on current dollar value for the ten (10) year time period.
• Due to the circumstances slated, an alternative roadmap is provided (based on optimal combinatorial methodology) for reaching higher peaks (Model I) within the organizational landscape.
• Once the model is implemented, assuming a cut of one billion dollars ($1,000,000,000) in Medicaid, and non increase in state contributions from the actual level, the simulation algorithm used suggests : surpluses from operations, and enable sustainable supplier and government account payables in a thirty day or less ( ≤30) period. 
• Surpluses will  offset debt payments with suppliers and government agencies like retirement and electrical energy

Baseline Government Health Sub-system Model

Agent Components

Baseline Model Agent Causal Loop Interrelations

Baseline Emerging Economic Results from Agent Interactions:

ten (10) Year Forecast

Why has the System Produced Unsustainable Economic Results for the last sixty (60) years?

1.The PRMC is a Complex System. That is, a nonlinear system defined by the interaction of multiple independent

agents (e.g ; people, institutions) that require adaptive strategies, from which goods and services necessary for the

treatment of conditions associated with tertiary and supra-tertiary medicine could emerge.

2.The coordination of operational logistics and resource allocation occurs through rules and agreements (contracts) between agents and

institutions and these in turn do not necessarily positively correlate with an equitable share of risk, income, expenditure and priorities.

3.The non-equilibrium between these variables is a macro by-product of the interactions and behaviors of different governance structures for each one of the component units and the health ecosystem along with the internal political power they display relative to other institutions.

Model I Proposal - Organizational Structure and Agent Illustration -
Puerto Rico Medical Center Integrated System (PRMCIS)

Model I - Transformed Puerto Rico Medical Center Economic Results (PRMCIS) *

* Revenue (state and federal assignments) ,expense and structural  assumptions included as per Model I proposal

Iteration I - Conclusion

1. Model I, is just a peak within the organizational landscape roadmap that could be achieved in a period of no more than three (3) years if decisive organizational and financial transformation actions are taken in the short and medium term.
2. The actual structure would be transformed promoting a framework that would minimize internal politics dynamics and maximize

operation results and efficiencies based on non-legacy technology. Duplicity of human capital, physical infrastructure and other resources,
will be eliminated since the traditional administrative functions will be streamlined.

3. As a direct function of a transformed structure, the economic behavior would generate

surpluses from operations, and enable sustainable supplier and government accounts payables

in a thirty (30) day or less period.

4. The significant impact in terms of administrative and medical related functions will be that a substantial part of the related

processes that are completed in different physical environments with outdated technology will be done through high mainstream

technology. Since the health system, globally speaking, is subject to substantial operational transformations, technology

providers in this matter have been approached.

5. Model I could be ground work space for technological trails (concept similar to clinical trials) with minimal cost (in kind)
for the Government of PR. Global providers are willing to move ahead with the project.

6. In addition, Model I requires the flexibility of using human capital as a functions of the duties,
time and environments required by the different sub-components of the system.

Complex Systems oscillate between Randomness and Order. This does not mean these Systems are Stable or Self-Equilibrating. Especially when factors as internal politics and governance issues are embedded within the landscape.
These Systems go through Phase Transitions. Management of the Puerto Rico Medical Center System and higher levels need to understand this... and take corresponding measures. This is a System of Health Services, which makes it truly unique.