The ANAHP is headquartered in Sao Paulo, Brazil and was founded in 2001 with 23 hospitals. Today the Association has 38 member hospitals. http://www.anahp.com.br
Interview with Adriano Londres
ANAHP – Associacao Nacional de Hospitais Privados
(National Association of Private Hospitals, Brazil)
Thursday, 24 April, 2008
Interviewed at El Panama Hotel, Panama City, Panama
Background, Adriano Londres:
Mr. Londres received his economics degree from Tufts University (US) in 1992 and the Brazilian equivalent of the MBA through the Executive Management Development Program (PDG). He was the former president of the Private Hospital Association of Rio de Janerio and is vice-president of the National Hospital Association of Brazil.
Hank Kearney (HK) Good morning Adriano, and thank you for taking the time to talk with me.
Adriano Londres (AL). You’re welcome. I have a few minutes to chat while my speech is being translated into Spanish.
HK: Adriano, can you please tell me a bit about the private hospital association, members, how it came about, etc.
AL: Certainly. The Associacao Nacional de Hospitais Privados is now seven years old. We have 38 member hospitals that collectively have revenues of $4 billion USD annually. That $4 billion is 15% of the total, private hospital market.
What is interesting is that while our members generate 16% of the total private market, they do it with less than 2% of the total hospital beds in the country. And, our member hospitals are highly efficient, running at 75% average occupancy.
HK: Does the Association represent the majority of private hospitals in Brazil?
AL: No, we have fairly tight membership requirements and we have only 38 hospitals. In Brazil there are more than 7,000 hospitals, 2,000 of which are private hospitals in the private market. We capture approximately 16% of all private hospital expenditures by private health plans.
HK: How is it that only 38 of 2,000 are members of the Association?
AL: Yes, this is a small number, but as I mentioned, we have strict requirements for membership. For instance, the hospital must be private of course, but it must receive its revenue from private health plans, must not be a university hospital, and most importantly, the hospital must not be integrated with a health plan. Hospitals can receive funds from the state as long as in a minor proportion. Currently, less than 3% of the total revenue of our member hospitals from the state.
HK: Oh, this is rather unusual and something I’d like to discuss further. But first, can you tell me a little of the private healthcare market in Brazil.
AL: The healthcare sector in Brazil is a mix of both private and state finance. About 80% of the health plans are employer based. We see this as a relatively slow growth sector. From 2000 to 205 this part of the market grew at around 2% per year. Recently, the expansion in the last 3 years has been around 5,7% per year. We have 39 million people in private health plans with an additional 8 million in dental programmes. However, Brazil’s individual market has slowed of late.
Of interest is that 20% of the population is insured privately and generating around 5% of GDP. This GDP percentage is almost equal to the 80% of the population covered by the state. Combined our healthcare expenditures equal 9% of GDP.
44 health plans have approximately 50% market share combined. All totaled we have about 4,000 health plans (health and dental). There are approximately1,600 health plans registered with the Regulatory HealthPlan Agency or ANS.
HK: Brazil is an enormous country, about the size of the USA, with approximately 190,000 million people. Most readers know the country has large agricultural and extraction sectors. These two industries, along with the vast Amazon delta and forest, take up a lot of land mass. Where is the business of private healthcare taking place in Brazil?
AL: Most of the country’s GNP is generated in the South-East region of the country. This corresponds with 67% of private healthcare taking place in this region.
Also, Brazil is the world’s 2nd largest private health care market, behind the USA.
HK: Let’s go back to the Association’s membership. You mentioned the member hospitals can not be integrated with a health plan.
In many regions of the world there have been strong links, even full integration, between the health plan (payor) and hospital. We see these links in the light of two drivers: one is cultural and the other is scale.
Brazil has a long history of physician owned health plans and hospitals. Recently we even saw one physician owned health plan get listed on the Brazil exchange, the BOVESPA.
AL: Yes, that is Medial Saude. And because it is an integrated hospital and health plan they are not members. Other plans include Intermedica, soon to be listed, Saude American, and Amil.
HK: Can you tell me why the Association does not want member hospitals to have any integration with health plans?
AL: These are rules put in place when the Association started. Today, 60% of our members are for profit hospitals, 40% are non-profit. The initial rules had two main purposes: focus the strategy of the Association given that its member hospitals have similar characteristics and goals, and in second place, minimize the chance of any interest conflicts. For this reason, hospitals that belong, to some extent, to health plans cannot join the Association. However, Brazil is a very large country, as we’ve just discussed. We know from past experience, geographic size is a challenge in the delivery of care.
So, while economies of scale work well for financial institutions and financial transactions, which is how we view health plans and health insurance, the delivery of medical care is a highly personal and local process. The medical doctor and clinical environments have an important role in Brazilian culture, and we, the Association, want to assure our member hospitals are focused on the patient along with efficient and profitable management.
HK: Can you give us examples of how the Association is working with its members?
AL: Yes, There are many examples. On one hand we have invested lots of time in putting together an Information System (SINHA) that includes all sorts of indicators: production, quality, economic, etc. These numbers are published every trimester and it turns out to be an important contribution in a sector where little information is available.
One other issue involves the obligation of member hospitals to be accredited, either by Joint Commission or by a National Accreditation Program called ONA. It turns out that 80% of our associated already fulfill this requirement, representing close to 35% of all accredited hospitals in the country.
Another example of innovation in Brazil, though this was not developed by the Association, is a classification list for hospital pricing. If the hospital meets certain requirements they are better able to negotiate with the health plans for reimbursement. There are three classifications with corresponding price increases vs. other hospitals not meeting classification. It can result in a 5%, 7.5% or even a 10% pricing premium.
HK: Adriano, I know you’re preparing for your speech and I want to thank you for your time.
AL: Your welcome.
Editor’s note: Dr. Londres referred to an innovative hospital pricing scheme. Time constraints limited our further discussions. However, this programme is an illustration of one type of pay for performance (P4P) scheme being developed by associations, health plans, health insurance funds, etc. To receive an excellent and brief (36 page) explanation, and ‘cautionary proposal’ about P4P, released this month by Dr. Alan Maynard please contact us via email at: email@example.com.