The Brazilian economy is growing at a faster pace. The strength of grain prices will boost the economy, while with the easy monetary policy, and well contained inflation, there would be some perspectives of sustained growth in the economy. Together with recently announced initiatives to raise public investments on several areas of the Brazilian economy, lower interest rates are expected to increase domestic demand, and recent data suggest that the economic activity is already in the growing stage.
Therefore, moderate expansion of economic activity along with the recovery in investments is expected to lead to a balanced increase of total aggregate demand and supply.Nevertheless, strengthening fiscal position and the continuous effort to reduce public debt challenge the need to address increasing social demands. In 2006, the estimation of public healthcare expenditure was $36.5 billion, whereas the private health expenditure was $42.3 billion,which is a total sum of $78.8 billion, representing approximately 7 percent of the Gross Domestic Product (GDP).
The Brazilian Constitution of 1988 brought about a shift in the healthcare paradigm, from a system that have been covering only certain social groups towards a universal assistance to the Brazilian population. The creation of the healthcare unified system "Sistema Único de Saúde" (SUS) transformed health assistance as a right of all Brazilian citizens.
The federal government has played the most critical role in the healthcare system until the late 1980s. Nevertheless, the SUS gradually decentralized the structure delegating more autonomy to states and municipalities as regards the management of the health system. Therefore, health coverage has increased as the quality of assistance has improved. Even though, the Brazilian health system has undergone a serious financial crisis during the 1990s. Shortage of resources brought down essential investments required to expand public health supply that would address an increasing demand.
However, it has not yet been approved the law that will regulate the Constitutional Emend 29, which stipulates that healthcare public spending will be related to the variation of GDP, therefore, ensuring a minimum flow of resources to the sector and thereby enhancing public investments and stimulating the Brazilian healthcare system as a whole.
Brazil has a two-tier system of healthcare access, public and private, and this is important especially in the context of the congestion in the public healthcare system. A minority group can afford for the expensive private healthcare system and those who cannot afford for it can use the public healthcare system. The federal government funds universal medical care through the SUS program. SUS funds public hospitals in Brazil and has contracts for medical care at individual private hospitals. Because Brazilians are not required to qualify or register for SUS, any person in Brazil can receive free medical care at any hospital with a SUS contract. Brazilian healthcare is also funded by private medical insurance, which complements and, in some instances, competes with SUS.
Currently, 74 percent of the population still receives healthcare primarily through the public health system, while only 26 percent of overall healthcare is from health insurance, cooperatives, self insurance, and other participants in the healthcare sector.
Under the current regulations, five basic categories of private healthcare insurance plans were established in law:
■ Outpatient
■ Hospitalization with obstetrics (childbirth)
■ Hospitalization without obstetrics
■ Dental
■ Reference
Insurers and healthcare companies can offer products that fall within the scope of one or more of these categories. The regulation sets out a minimum product specification and rules of behavior for health insurance providers. However, this strong regulation framework has reduced the insurers´ flexibility and their freedom to set prices. There is a pressure to reduce the increasing healthcare costs, and constant competition is set between healthcare providers and insurance companies that aim at reducing reimbursement fees. Given the vertical integration and consolidation processes that healthcare insurance market has been through, the bargaining power of healthcare providers has been diminishing against the insurance firms.
The corporate sector accounts for a large proportion of demand for health insurance. This is because many companies provide health insurance as a standard benefit for employees. Insurers differentiate by prices, as well as by product features and income groups.
The main strategy for strengthening public primary healthcare is the Family Health Program, introduced by the municipal health secretariats in collaboration with states and the Ministry of Public Health. The federal government supplies technical support and transfers funds through the Basic Attention Plan (Piso de Atenção Básica), a federal plan aimed at supporting primary healthcare actions.
Another project that has been in action is based on The Health Pact (Pacto pela Saúde), which is a plan focused on SUS institutional reforms, arranged between the federal government, states, and municipalities, aimed at promoting governance process innovations, in order to improve efficiency and quality in the public health system.
It redefines responsibilities for each of the government spheres, which are formally committed to achieve goals that are set annually, such as infant mortality reduction, control of epidemic diseases, and decreasing breast cancer incidence.
Hospital Sector
According to official statistics, there are 7,646 hospitals in Brazil, out of which 62.5 percent are private institutions. Moreover, within the private sector, profit institutions encompass around 70 percent of total private healthcare providers.
Strategic sourcing is increasingly used by the Brazilian hospitals. The process started in 2001 and has been growing since then. It is basically an institutional procurement process aimed at improving the purchasing activities of hospitals. Therefore, hospitals are prominently improving their supply chain management. The main steps of strategic sourcing process are:
■ Assessment of current expenditure (product purchased and the source of purchase)
■ Assessment of the supply market (various products offered by the participants)
■ Development of a sourcing strategy (various sources to purchase a product, maximizing efficiency and minimizing costs)
■ Identification of suitable suppliers
■ Negotiation with suppliers
■ Implementation of new supply structure
■ Track results and restart assessment (continuous cycle)
The implementation of such process can benefit hospitals in many aspects such as:
■ Reducing the administrative costs up to 20 percent, since it is an electronic process
■ Reducing the spot purchases (emergency), thereby enhancing the opportunity for negotiating prices
■ Shift of attention from the purchasing process toward a more strategic focus, which includes analysis of the market, new specifications, purchase financial modeling, and closer relationship with the medical departments.
Outsourcing is another pattern inside the hospitals. Hospitals aimed at diminishing costs are outsourcing non-core activities such as laundry, meals, maintenance, and security, among others, to specialized firms. Even the pharmacy department is becoming the focus of outsourcing, since hospitals can expand the number of beds in areas previously occupied by this department. While outsourcing is not a dominant path, the core function of the pharmacy department inside the hospital has been changing. Besides the quality control of products consumed and management of drug reception, storage and delivery to patients, it has been ever more valued for pursuing of quality standards whereas stocks are being minimized in order to avoid unnecessary costs.
-Frost& Sullivan