After a stunning run of hospital and clinic buys in Brazil, the U.S. insurance giant is putting its now-sprawling house in order.
UnitedHealth Group certainly knows how to make an entrance. The American insurance company entered the Brazilian market in 2012 with the purchase of the country’s largest insurer and hospital operator, Amil, for US$4.9 billion. At the time, direct foreign investment in hospitals was prohibited by law, with an exception carved out for foreigners to maintain equity investments in health-plan operators.
The prohibition on direct foreign investment was relaxed in 2015, but by then UnitedHealth Group had a head start, having acquired 22 hospitals and nearly 50 clinics owned and operated by vertically-integrated Amil. Since then, UnitedHealth’s Brazil healthcare holdings have expanded rapidly; the company now owns 40 hospitals and 50 clinics, acquiring two São Paulo hospitals in the last quarter of 2016. UnitedHealth Group Brazil, owned by UnitedHealth Group, is now the largest healthcare company in the Latin American country.
But now the company may be focusing on strengthening its internal operations before expanding further. In March 2017, UnitedHealth Group Brazil announced that it will be upping its investments in information technology (IT) over the coming year in order to run a tighter ship in Brazil. A total investment of more than US$110 million — a 26 percent jump over its investment in technology last year — will be used to digitize operations, including everything from selling health plans to ordering medical tests. The company says this digitization effort will increase efficiency, reduce costs and fraud, and leverage big data to better calculate health plan costs.
Observers claim the move will also allow the healthcare giant to better integrate its business, which in addition to hospitals and clinics includes health- and dental-insurance plans for 6 million people. “It seems that the plans for this year are for the company to see how they can better manage what they already have before purchasing more hospitals,” says Kleber Santos, the healthcare practice lead for Speyside Group, in São Paulo. “They are spending money to try to optimize their investments and organize their house.”
Santos points out the effort may already be paying off. UnitedHealth Group Brazil is expecting to post profits for the first time since 2013, and an insurance industry association projects that by year’s end the company’s insurance enrollments will stabilize after a long period of decline, he says.
Other market analysts are confident that UnitedHealth Group Brazil will be well poised to continue its expansion as Brazil’s economy recovers from the crises that shook the country’s politics and economy. “UnitedHealth came in early, has grown a lot, and is in a leadership position in a sector that in my view has huge potential,” says Renato Polizzi, a partner with Modal Investment Bank. “It is the biggest managed care organization and it has just 12 to 13 percent of the market, so there is room for growth.”