Rede D’Or and SulAmérica will exchange information about users, but there are ethical limits

The purchase of the third largest health plan in the country by the largest private network of hospitals in Brazil moved the supplementary health market. The announcement of the acquisition of SulAmérica by Rede D’Or, made this Wednesday (23), deepens the trend of verticalization in the health sector in Brazil: when institutions become owners of all fronts of medical care, such as clinics, laboratories and hospitals.

In the case of Rede D’Or, the company had already accumulated 16 acquisitions in 2021 alone, with an investment of almost R$3 billion, especially in hospitals. But now, with SulAmérica, it has landed once and for all in the health insurance market and has access to more than 7 million customers – precisely the public that uses its hospitals and oncology clinics.

Rede D’Or is already the main shareholder of Qualicorp, the largest administrator of health plans by membership, which in recent years has built a platform of plans that brings together more than one hundred operators. About 230 thousand SulAmérica health plans are in the membership modality (which serve professional categories and are contracted through unions or associations, for example).

“Until now, Rede D’Or’s moves were more focused on the purchase of small hospitals to expand its service network. But with SulAmérica and Qualicorp, the company also starts to focus on expanding services and becomes more competitive against others in the sector, such as the merger between Grupo Notre Dame Intermédica (GNDI) and Hapvida”, says Fernanda Rodrigues, analyst at Lafis Consultoria.

In a market like the Brazilian one, which is getting older and older, with a rise in the population’s life expectancy, the costs of health plans increase: younger users, who in theory use the plan less and “pay the bill” of elderly users, are decreasing in proportion. To balance the budget, plans need to save on all fronts. Paying less for consultations and exams is one of them.

In a vertical structure, the plan can control the doctor’s ‘styling’, in terms of the number of tests requested by clinics and specialists. The hospital, in turn, can control the number of hospitalizations or treatments requested by the accredited network.

“From the sharing of information, with the integration of the customer base, it is possible to offer personalized services, which is a trend in the health sector”, says Fernanda. “By providing adequate care to the needs of each user, the provider can act in a preventive and more efficient way, which generates a reduction in hospital costs, for example.”

Although experts indicate that the consolidation of the sector, from mergers and acquisitions, and the verticalization of services increase the competitiveness of companies, the practice needs to be closely monitored by regulatory bodies, especially the ANS (National Supplementary Health Agency), as the recent episode of Prevent Senior showed, because there are ethical limits to this sharing of information.

Focusing on the elderly public, Prevent Senior starred in one of the biggest scandals pointed out by the CPI (Parliamentary Commission of Inquiry) of Covid last year. The company gained space with the sale of plans at competitive prices (monthly fees at R$ 800). But he saw his image crumble with complaints of administration of the “Covid kit” (medicines with no proven effectiveness to control the disease) in patients, without the consent of the families, in addition to fraud in death records.

Precisely because it has a vertical structure, which controls the entire process, the CPI understood that transparency in this type of operation is more difficult: in the case of Prevent, the quest to reduce costs through shorter hospital stays, for example, was at the forefront. front of the user’s well-being.

Fernanda Rodrigues highlights that, according to the statement sent to the market this Wednesday, Rede D’Or and SulAmérica remain independent. “There must be more a synergy of services, than a structural change in companies”, she says.

“Rede D’Or must access SulAmérica’s service base, not only to increase its revenue, but to learn about the health plan market. But it will maintain the commercial relationship with the other operators, which make use of its network of hospitals.”

For Denis Morante, managing partner of Fortezza Partners, an investment consultancy specializing in mergers and acquisitions, the transaction practically nullifies the possibility of Rede D’Or coming to buy Amil’s portfolio of business plans, as was being speculated by the market. Amil’s portfolio of individual and family plans, in turn, was being negotiated for Fiord Capital – but the operation was suspended by ANS.

“I am curious to know what will be the evaluation of Cade [Conselho Administrativo de Defesa Econômica] about the operation, because the group will have an important part of the market, in addition to the largest hospital network in the country”, he says. “I believe that for smaller health plans it will be increasingly challenging to stay in the race”, says the consultant, emphasizing that the operation should generate a lot of value for shareholders.

In this Thursday’s trading session (24), SulAmérica’s shares soared with the biggest high of the day, while Rede D’Or registered the second biggest drop, after Qualicorp. SulAmérica closed at R$35.64, up 15.19%, while Qualicorp dropped 14.77%, to R$13.85, and Rede D’Or dropped 7.66%, to R$51.25.

The fall in Qualicorp’s shares can be explained from the normative resolution of the ANS, which determines that benefit administrators and health plan operators cannot be part of the same group. But as Rede D’Or is a minority in Qualicorp (although it is the largest shareholder), it is not known what the agency’s position will be in this regard.

“For SulAmérica, the deal with a renowned network like Rede D’Or makes its health plans more attractive, in addition to potentially reducing its claims ratio”, says analyst Leo Monteiro, from Ativa Investimentos.

Analysts Rafael Barros and Larissa Pérez, from XP Investimentos, state that the acquisition will allow Rede D’Or to expand its presence throughout the health value chain, being able to act in a more integrated way, offering new products and increasing the number of health insurance.

“However, we see a high risk that this deal will harm the relationship with the other health plan operators responsible for most of Rede D’Or’s revenues”, they say.

In a report, analysts Eduardo Nishio, Guilherme Vianna and Bruno Bandiera, from Genial Investimentos, state that “for SulAmérica, the transaction greatly accelerates its inorganic growth strategy, which the insurer had lagged behind in the dispute for the consolidation of the sector” . According to them, with small acquisitions, the company would take time to gain strength – in December, SulAmérica had announced the purchase of Sompo. For them, the Rede D’Or-SulAmérica conglomerate is more than large enough to face the new Hapvida-GNDI group.

“Amil still remains, which if the sale of the deficient individual plans is concluded, may be the next jewel of the time in this consolidation process that has been transforming the health sector in Brazil”, they say.