News/Events

Clinic to Hospital: After the Pandemic, Improving Health Care Delivery

Wednesday, June 23, 2021

Improving Health Care Delivery

If a strawberry or cucumber or spinach leaf — or any number of other fruits or vegetables — was grown in the U.S., it’s likely a migrant farmworker had a hand in its journey from ground to plate. These essential workers are keeping U.S. farm systems functioning, and they require essential services — including healthcare.

Dr. Raul Payán has been answering that need for 30 years. He runs the OSME medical clinic in San Luis Río Colorado in Sonora, Mexico, a border town just south of Yuma, Arizona. He and his team provide general and urgent care, imaging, and routine medical services to the community, mostly made up of migrant workers and their families whose healthcare costs are covered by U.S. insurers and businesses.

But Dr. Payán’s clinic is not a hospital, so he and his team refer patients with more serious medical needs to hospitals, often in the city of Mexicali, an hour away, where prices for care are higher. This means the clinic is losing business it could keep if it had a hospital, insurance companies are spending more than if OSME had a hospital in San Luis Río Colorado and patients are inconvenienced by being forced to travel to receive treatment and pay higher copayments.

To provide specialist inpatient care, Dr. Payán is planning to grow the OSME clinic into a full-scale hospital, with the goal of retaining patients within the system, lowering their cost of care, and attracting new ones from the surrounding region. In response to the effects of the COVID-19 pandemic, the North American Development Bank (NADB), a border-focused developmental financing institution run jointly by U.S. and Mexican leadership, is looking to support projects that have both environmental benefits and direct positive impacts on the economy of the U.S.-Mexico border region and the health and well-being of border residents.

The bank works closely with project sponsors to create financing packages that move crucial ventures forward, either through loans or grants. Recognizing the success of OSME’s service model, NADB is considering a loan to the medical group for a portion of the funds it needs to expand. Before deciding to support OSME’s growth, though, the finance institution turned to the William Davidson Institute (WDI) to tackle some of its due diligence and provide deep industry and business analysis into the possible benefits of such support.

HEALTHCARE AS CRITICAL INFRASTRUCTURE

NADB is dedicated to supporting and financing environmental infrastructure projects along both sides of the border, which typically include water and energy infrastructure projects. Amid the massive impact of the COVID-19 crisis, however, it became clear that NADB should play a key role in working to enhance the economic recovery and the general health and welfare of U.S.-Mexico border communities while remaining cognizant of its core mission to preserve, protect and enhance the environment of the region.

The pandemic’s global impact highlighted that infrastructure includes any systems or spaces required for a community to survive, maintain its welfare, and improve its well-being — and that encompasses healthcare services and facilities.

With that in mind, the bank is beginning to offer loans to nontraditional projects that include healthcare initiatives along the border under its COVID-19 Recovery Loan Program, an imperative influx of funds that could help bring greater care and stability to the local communities. They’ve allocated $200 million for these initiatives, and the potential OSME hospital is the first such healthcare project.

REACHING THE OSME PATIENT COMMUNITY

The OSME clinic has been connected to essential migrant workers for decades, and that community is only growing. The agricultural industry needs 1.5 to 2 million workers to complete planting, harvesting, and processes tasks, and since farms across the country are struggling to find U.S. citizens and permanent residents to handle these critical responsibilities, migrant workers are filling the gap.

Although some of these workers are undocumented, many take advantage of a visa system meant specifically for this kind of work: the H-2A and H-2B visas. These visas have increased dramatically over the last few decades. By 2019, there were 257,667 jobs approved for H-2 visa positions by the U.S. government, with 204,791 visas issued. And 91% of those were claimed by Mexican citizens.

Many agricultural workers’ families live on the Mexican side of the border and use OSME and clinics like it for their medical needs, and the workers themselves return to the town from the U.S. for their care, as do some U.S. citizens and permanent residents of Mexican heritage. In fact, while just over 200,000 visas were issued to temporary agricultural workers in 2019, there were 394,564 H-2 visa admissions across the U.S. border during that same period, demonstrating the back-and-forth nature of workers in these roles.

To incentivize workers to take on these fundamental farming tasks, agricultural enterprises are now offering medical insurance and coverage to migrant workers, and that’s been to the benefit of the OSME clinic. Today, around 75% of OSME patients are covered by either U.S. insurance companies or U.S. businesses that foot the bill for health services or procedures for their employees. For the most part, Dr. Payán and his staff work directly with insurance companies to provide this care, even running the only U.S.- insurance-connected pharmacy in the region.

[OSMED Clinic has] built their business plan around capturing more of the value chain of care for their existing insured patient market while also enabling their U.S. health insurance partners to expand their market, bringing more workers and their families into the insurance net.

— Ioan Cleaton-Jones, Director of healthcare delivery at WDI

A BUSINESS THAT MAKES SENSE

This insurance-focused service plan is one that holds tremendous financial potential for the clinic and provides a framework for offering excellent healthcare to the community. It’s already working for routine and urgent care, and Dr. Payán is certain it can only improve with the construction of an OSME hospital.

Ioan Cleaton-Jones, Director of healthcare delivery at WDI and a seasoned healthcare finance and management consultant, agrees. He has been working closely with both Dr. Payán’s OSME team and the team at the NADB to ensure adequate due diligence while also examining the likelihood of success for both parties. He’s optimistic about the possibilities.

“This makes sense as a business,” Cleaton-Jones explains.

Not only does the OSME clinic already run at a profit, but its plans to expand are clear and full of potential. “They’ve built their business plan around capturing more of the value chain of care for their existing insured patient market,” says Cleaton-Jones, “while also enabling their U.S. health insurance partners to expand their market, bringing more workers and their families into the insurance net. Additionally, they anticipate that there will be patients and doctors who would come from Mexicali.”

The clinic has provided decades of care to essential agricultural workers, and that community of migrant workers and their families may now have access to a hospital for care it either couldn’t get before or at reduced cost. This is thanks to Dr. Payán and his team’s devoted efforts and WDI’s expert analytical support.

Cleaton-Jones hopes WDI will continue to provide this kind of analysis to support healthcare projects, and he believes the positive business model of this OSME hospital expansion is a beacon for what’s possible.

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