Temperature rising in healthcare consolidation

The announcement that UnitedHealth is buying Amil Participações (October 8) goes someway to fulfilling predictions of a wave of M&A in the fragmented and fast-growing sector. Head of Bradesco Asset Management and former secretary for the Treasury, Joaquim Levy, expects to see more such deals.

Brazil does have a national public healthcare system, SUS, but a key aspiration of the growing middle class is to leave this very imperfect system and move over to private healthcare providers. With nearly full employment and companies struggling to hire and retain talent, a key plank of hard pressed HR departments is to offer healthcare to a growing slice of employees, boosting numbers enlisted in plans significantly. Tough national legislation means that health plans have to be pretty comprehensive in the treatments they offer and fast in referring patients so companies can’t skimp on costs.

The diagnostic companies are seen as particularly likely to consolidate. Foreigners are restricted from owning hospitals which crimps their ability to take over health care providers (they often own hospitals). Diagnostic centres are both popular in Brazil and the legislation surrounding their take-overs less restrictive.

Outside the United States, Brazil is the largest and fastest growing private health care market in the Americas. As Stephen Hemsley, president and CEO of UnitedHealth, pointed out that it was access to a large and growing market that made the deal so enticing. Expect others to follow.

About admin

I've been researching and writing on Brazilian financial markets, industry and economy since 2006 for a wide range of specialist media, consultancies and investors. Before that I spent over 10 years in London and New York writing for and editing magazines and journals dedicated to finance, investment and economics in developing markets, mostly for the Euromoney Institutional Investor group and Thomson Financial. Areas of coverage Below are samples of areas that I cover and some of the common themes that I investigate. Capital markets BM&FBovespa markets *capital raising trends: via equities (IPOs and secondary issuance), debt and loans *the asset management industry: legislation and coverage of the key hedge, pension and investment funds * corporate governance: how the regulator is seeking to strengthen best practice and limitations * debt markets: the nascent corporate markets, attempts to boost liquidity and new insturments. * private equity market: why this market has been so successful, who’s involved. *electronic, high frequency trading and alternative trading platforms: what does the future hold? Banking *credit: the growth of consumer and business credit and competition between banks and models *Public versus private: the role and market share of public and private sector banks and the politicization of the industry * internationalization: which Brazilian banks are expanding overseas and where * investment banking: the growth of the domestic market and who’s winning which mandates *regional banks and development banks: what role they play in the industry and how they compete Mining *licensing: the complex process of obtaining environmental, water, land and operating licenses at a state and federal level. * capacity: the feasibility and sustainability of capacity increases * financing: how miners are raising finance in Brazil and abroad *competition: the interplay Vale, MMX and junior miners *logistics: rail, road and port connections Oil and gas: the fund raising issues related to the massive of pre-salt (link) Multilatinas: Who are they and how and where they are expanding Meatpacking: Are debt burdens sustainable, what are the different business models for areas such as branding and distrbution Agriculture: How are farms consolidating, what are environmental risks, how can foreign investors be involved. IT and software: Can Brazil take on India and build a viable long-term IT industry? For more information on clients and work, please see the media and consultancy sections.
This entry was posted in Articles. Bookmark the permalink.

Leave a Reply