Global Health seminar: Private Healthcare Consolidation and Spillovers to the Public System: Evidence from M&As in Brazil

Event details

Abstract:

The global trend of Mergers and Acquisitions (M&As) in healthcare has accelerated in Brazil, intensified by a 2015 policy shift allowing Foreign Direct Investment (FDI) in the sector. While market consolidation could potentially improve efficiency, it risks increasing market concentration and generating crucial spillover effects on the interdependent public healthcare system (SUS), a dynamic critical to global health policy. This study provides an empirical evaluation of M&A impacts, focusing on facility-level changes and regional market dynamics. We leverage data from Brazil's National Registry of Health Establishments (CNES) and transaction data (Refinitiv Eikon/Bloomberg), identifying 165 M&A events involving 636 facilities. We employ a staggered Difference-in-Differences (DiD) design to estimate the causal impact of acquisitions on infrastructure, workforce, and the voluntary health insurance portfolio within acquired units. We also examine regional dynamics, assessing the relationship between changes in private market concentration and public healthcare delivery.

At the facility level, we find no significant post-acquisition changes in infrastructure or workforce, suggesting stable service capacity in the acquired units. The main consistent causal effect is a shift in the portfolio of voluntary health insurance plans accepted, indicating strategic market repositioning by the acquiring groups. Although the regional analysis showing a relationship between increased private concentration and higher utilization of public elective services requires further causal investigation, the concentration dynamics raise immediate concerns. In conclusion, M&As in Brazil's private healthcare sector have limited effects on service capacity within acquired units but strongly suggest strategic market repositioning and increased pressure on the public system (SUS) due to market concentration. This consolidation raises concerns about competition, access, and the long-term sustainability of the dual health system, offering important lessons for regulators globally.

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