Analyzes tend to become more severe and target the verticalization of the sector
The total number of health plan operators has been falling in Brazil, with a constant movement of acquisitions between companies. The drop was 47% between 2011 and 2020 when the National Regulatory Agency for Private Health Insurance and Plans (ANS) with 711 companies. The data are from a study by Cade, the antitrust regulator, which began to look more closely at the possible negative effects on the competitive environment of vertical integration between health plan operators and hospitals.
This happens when a healthcare plan operator buys hospitals, for example. According to a source at Cade, the tendency is for the antitrust regulator to become more rigorous in its analysis because the market is becoming increasingly concentrated, and the expectation is that more operations will take place in 2022.
The movement of concentration in the health markets began to be recorded by Cade in 2001, with the acquisition of the HSBC bank’s portfolio of health insurance beneficiaries. But it was only from 2007 that the regulator observed a significant increase in the volume of cases. From 2008 to 2012, the first peaks of merger notifications occurred. But of 285 cases analyzed by Cade in almost 20 years, only three were totally rejected.
It is not just about operations between competing companies: vertical integration is one of the most discussed aspects in the merger analysis in this area, according to Cade. This was detected in 51% of the 285 mergers. Even so, although they were cited to impose conditions on the approval of some operations, possible negative consequences of the vertical integration between health plan operators and hospitals served as a justification for Cade to reject only one operation.
Inside the agency, there is a discussion whether verticalization can restrict competition in the market, making it difficult for new companies to enter it, or that already established clinics are able to continue operating. On the other hand, for the lawyer and professor at Mackenzie University Vicente Bagnoli, it can allow lower prices to be passed on to beneficiaries.
Rubens Granja, a partner in the healthcare area at Lefosse, the consolidation in the sector has also generated the integration of hospital products and structures, the offer of technological solutions, and a wider range of plans and services.
He cites some mishaps, such as the disaccreditation of services, often a result of verticalization, and reallocation of plans, but says he has not identified a significant increase in consumer complaints. Monitoring by the ANS helps maintain the sector’s efficiency and protect the user, he argues.
Lawyers who work with the patients, on the other hand, criticize verticalization. With the mergers, operators can also verticalize services, which can be harmful to customers, according to Patricia Akitomi da Rocha, a lawyer specializing in hospital medical law. An example mentioned by her is the disaccreditation of clinics and services that the user used before the change in the company.
In cases in São Paulo, Brasília, and Minas Gerais, she verified problems that clients faced with disaccreditation after mergers. There are cases in which the patient undergoes cancer treatment and it changes location after a fusion. According to the lawyer, the justice system does not usually grant an injunction to the user, if the new place provides the same type of treatment.
“The concentration in the sector can be very harmful to the patient, who will find himself at the center of a conflict of interests, in which the economic interest tends to overlap with the medical interest,” says lawyer Luiz Antonio Varela Donelli, partner at the Donelli and Abreu Sodré Advogados (DSA), for whom verticalization causes enormous difficulties for independent clinics and doctors.
Marcos Novais, executive superintendent of the Brazilian Association of Health Plans (Abramge), says that the offer of products (types of health plans) has increased, even with the reduction in the number of operators. “There was little product offer. Now there are regional, municipal [plans], covering a network or family doctor,” he exemplifies. He also highlights that, despite the reduction, there are still more than 700 health plan operators in the country. “It is difficult to talk about concentration in this market. No player has a considerable relevant market,” he says, adding that consolidation represents an efficiency gain.
For him, there is room for more operations in the sector. This is because there are startups in the market and there is a lot of people moving from one health plan to another, something like 2% per month.
In the last decade, medical plans (with or without dental coverage) increased by 3.5%, to 47.11 million in 2020 from 45.54 million beneficiaries in 2011 — a slight drop from the highest point in 2015, when it exceeded 50 million.
According to Abramge, the 11 largest operators account for 41.48% of the medical insurance beneficiaries in the country, with the remaining 58.52% distributed among the other 700 operators registered by the ANS. The data are from September 2021: Bradesco Saúde had 6.72% of the market, followed by Notre Dame Intermédica, with 6.57%, Amil, with 6.08%, Hapvida, with 5.76%, and Sul América with 3, 99%.
Sought by Valor, Bradesco Saúde, Hapvida, Sul América and the National Federation of Supplementary Health (FenaSaúde) declined to comment. The other companies, the Brazilian Medical Association (AMB) and the ANS remained silent.