Governments in Latin America still have not released clear strategies regarding how they will address the massive backlog of diagnostics and procedures caused by the pandemic. At the same time, we are seeing new waves of elective procedure delays as COVID infections rise again in some areas. Over the next few months, we will see initial 2022 public healthcare budget proposals, which should provide strong indicators about next year’s priorities. In Brazil, private hospitals, clinics, and laboratories are experiencing a wave of consolidation, with key provider networks in Brazil pursuing aggressive acquisitions and expanding geographically.

As Brazil’s economy recovers from the pandemic, the country has experienced a boom in M&A activity, with healthcare as one of the leading industries for private capital investment. After the largest Brazilian IPO of 2020, hospital group Rede D’Or has been pursuing an inorganic growth strategy by purchasing major hospitals and expanding its regional footprint. Other hospital networks and oncology clinics, such as Mater Dei and Oncoclínicas, have followed suit by filing for IPOs in 2021 and announcing plans for expansion.

What is driving these consolidation efforts?

Private provider networks in Brazil face increasing competitive pressures

Generally, consolidation improves providers’ bargaining power, allowing them to secure better prices and coordinate care more efficiently than in a heavily fragmented system. In response, smaller provider networks will need to become more efficient to compete.

Private payers are changing their financial arrangements

Consolidation in the health sector is changing the landscape for all key players, including private insurers who are starting to rethink their financial arrangements and in-network offerings to beneficiaries (recently, UHG’s Amil reconciled coverage with Rede D’Or after rocky negotiations in 2019). Securing deals with fast-growing provider networks in Brazil will be an essential step for payers to ensure patient access in their key markets.

Additionally, vertical integration has allowed insurers such as Hapvida and NotreDame Intermédica (whose merger will soon be approved) to optimize their low-cost plan offerings, which is adding pressure on non-vertically integrated payers to Innovate.

FrontierView combines world-class strategic market intelligence and analyst advisory services through data, insights, and analytical tools, to power your business decisions. We offer a solution that puts the right information at the right time, at your fingertips. If you would like to request access to the full Latin America Healthcare Monitor report with key trends and drivers on all major Latin American markets, start your free trial today. You can also download our free mobile app to stay ahead of developments and trends to enhance your performance in must-win markets. Available on iOS and Android.