Plague of corruption and fraud in Brazil’s health sector is a life-or-death issue

It’s widely known that the taint of corruption can effectively kill the economy of a given jurisdiction or particular sectors when the grip of graft becomes too strong or international perception gets too high.

But those fears seem to be magnified when the corruption grafts itself to the health care sector, which in some countries is considered a public, not private entity. When opportunistic and feckless quasi-public officials meet weak federal oversight and equally feathery punishments for corrupt acts, in the health care field that can literally be a deadly combination.

In Brazil, the cumulative cries for change have reached a fever pitch in recent weeks, with citizens and doctors calling for not just change and better oversight of hospitals and staff to weed out illicit individuals, but also for an end to the hypocrisy of a government that can spend lavishly for the World Cup, but misfire on achieving the core goals of giving health care professionals the tools to survive and save lives.

The Brazilian federal budget has suffered a loss of 2.3 billion reais in the health sector, approximately US $797 million in nine years, according to the main watchdog over the Brazilian executive branch.

According to the federal accountability office, called the TCU in Brazil, the national funds have been siphoned due to corruption from 2002 to 2011. While the government argues that the amount is a small percentage of the sector’s budget, the figure  represents one third of the federal funds diverted from the national budget due to corruption.

The study unmasks a life-or-death dilemma the Brazilian public health system has been suffering with for decades – hospitals lacking in funds, workers and supplies.

Although the federal government has advocated for finding new sources of funding for the Unified Health System (SUS), these deviations due to fraud and corruption are bleeding out millions of dollars each year.

Policy makers, healthcare workers and citizens are calling out for change

Just this week, family members of hospital patients in the Brazilian Northeastern state of Pernambuco stood at the public University Hospital for hours, with signs demanding “respect” and “dignity” for their kin.

The protest was spurred by a lack of doctors, medical workers and medical supplies, the core necessities of a healthcare institution. One mother told local media outlets that her son had suffered for 17 days at the hospital waiting for a surgery.

Similarly, in the capital city of Brasilia, public healthcare workers marched in front of the government palace, asking why their salaries and benefits have been backlogged for more than a month. “Patience doesn’t pay the bills,” the marchers chanted, according to media reports.

Brazilian media accounts show that the fraud within the public health sector is not only widespread, but blatant.

There have been publicized incidents of overpricing for the purchases of ambulances, billing for materials that are unnecessary for the given procedure, and a hospital that even billed the expense of a childbirth procedure when the patient was male.

Dr. Jose Carlos Pitangueira Filho, a medical doctor and director of the National Institute of Aid to Health and Education, echoes the dissatisfaction of Brazil’s population and the particular helplessness that comes with being a healthcare worker within a system that is inefficient to its patients.

“Yes, corruption is entrenched in bargaining, the cheats and SUS deviations, and needs to be tackled rigorously,” Filho wrote in an editorial for Rio de Janeiro based newspaper O Globo.

“But is corruption the cause or effect? Diagnosis or symptom? The main causes of a permanent crisis in the public health system result from the lack of focus in actions, and the disregard for the medical profession. To summarize in two words: inefficient management.”

Doctors and other healthcare workers in Brazil are finding it next to impossible to treat patients, especially in mid-sized cities and small towns where the internal controls and monitoring levels are dismal compared to that of metropolitan centers like Sao Paulo and Rio de Janeiro.

Protests around the country erupted last year in response to the construction of astronomically expensive stadiums and other projects related to the World Cup, instead of investing in the host country’s health and education sectors.

Doctors themselves clamored for the attention of the federal government as public hospitals in deteriorating conditions were unable to handle the volume of patients.

In one popular video highlighted by the Brazilian media, a doctor in Rio de Janeiro stands at the door of the public hospital, saying there is nothing she can do to help the scores of patients awaiting treatment as she is the only doctor on staff.

Filho said the health care sector in Brazil must focus on results to make sure that in addition to procurement, contracts and agreements, managers and tax go back to promote the client’s satisfaction.

Government collusion and complaceny infects healthcare industry in Brazil 

When the authorities responsible for maintaining internal controls and complying with ethical standards shrug at those very principles, it is difficult for this kind of systemic corruption to be washed out, said Claudio Peixoto Silva, the head of Corruption and Fraud Prevention Services at KPMG Brazil in Sao Paulo.

“The government pays out the expense and doesn’t question it when it comes from the public sector – they are complacent,” Silva said. “When the government is involved in the crime and it benefits them, the system of controls can’t be fixed.”

The extent of corruption in Brazil has been revealed in areas beyond healthcare, in particular with the investigation of state-run oil and energy giant, Petrobras.

High-level government officials, company employees and third parties are currently being probed for their involvement in the Petrobras bribery scandal.

In their investigation, Brazilian authorities  revealed that members of the ruling government party took kickbacks that allowed Petrobras and related vendors to win huge contracts.

While Brazil has fiscal procedures that public healthcare institutions must follow when invoicing for patient treatments, acquiring medical supplies and paying healthcare workers, there is a lack of implementation, Silva said..

Congress attempted to tackle the issue head on with a new  anti-corruption law last year, the Clean Company Act, which centered on the bribery of foreign officials in Brazil.

Though akin in some respects to  the US Foreign Corrupt Practices Act (FCPA), but similarly, gray areas still exist in regard to how to implement, train and enforce it.

From 2008 to 2012, the number of individuals criminally convicted for crimes against the public, which  includes corruption, increased 133 percent in the period, according to anti-corruption specialist and attorney Carlos Ayres, in Sao Paulo, hinting at increased enforcement of the law.

Since the health care system of Brazil is largely a public service, doctors and healthcare professionals are considered government officials in most cases.

Any scheme that would bribe healthcare professionals to take on contracts with pharmaceutical companies or surgical material companies would be a violation, Ayres said, adding that it is vital to make sure that the distinction is made and the proper channels are highlighted and mitigated for the risk of graft within the healthcare industry.

Even more worrisome, according to Silva, is that the public health sector has a notorious history of not only exploiting the system in spite of the law, but also not even knowing they are subject to certain regulations.

Silva, who regularly gives talks on anti-corruption and anti-fraud topics, said he was astounded when some of the key fiscal policy enforcers in certain smaller municipalities did not know they were subject to the Clean Company Act.

Silva said there is a reason why the public health sector is plagued with corruption.

The private sector, he said, implements controls to minimize extra costs and maximize user satisfaction, because it is of benefit to their business. In the public sector, while there are mechanisms in place to do the same auditing and monitoring, they typically are not implemented because of a lack of government oversight.

Furthermore, punishment and recovery in Brazil is a long and disappointing process. Judicial and administrative processes delay any criminal prosecutions, though cases of abuse in the sector are prevalent.For instance, a 2004 government audit raised questions about SUS in a small city near the metropolitan area of Sao Luis. In addition, reviewers  uncovered a fraud amounting to R$ 27.9 million, a sum never recovered for the budget, with authorities finally starting the administrative process seven years later in 2011.

Plague of corruption requires radical government measures and systemic overhaul

Another unfortunate tale comes from a doctor in the state of Rondonia, where he is a representative for the Federal Council of Medicine, according to an account detailed in an editorial published in Brasil Medicina in July 2005.

After finishing his residency in Rio de Janeiro more than two decades ago, he went back to his home state, where he found dilapidated institutions and a scarcity of materials he likened to that of the “Castro regime,” with patients left in the corridors of hospitals due to a lack of staff and space.

“I believe that corruption, particularly in the public sector, should be considered a heinous crime,” said Dr. José Hiran da Silva Gallo, in the  editorial for Brasil Medicina.

“By an insuperable reason: corruption kills – literally,” he said in the editorial. “If cancer patients remain unattended, abandoned, there is another cancer entrenched in political circles that helps to decrease quality of life.”

If corruption is the disease, the cure is a systemic and cultural change in the way the government implements and enforces policies that involve internal controls against fraud and corruption, Dr. Gallo suggests in the piece.

“Corruption, as well as cancer, requires radical measures, albeit possibly crippling,” he stated in the piece. “The corrupt, these heinous criminals, cannot go unpunished, wealthy, intimidating and debauched. Finally, it is necessary to end the misconception that the law is for everyone – justice is for everyone.”