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EF: Could you provide an overview of your role at Deloitte's Life Sciences and Health Care division in Brazil? What services do you offer, and what are your key priorities for 2024?  

LJ: Within the six big industries of Deloitte, I lead Life Sciences and Health Care in Brazil. I have worked in the company for seventeen years, of which the last fifteen have been in this area. Regarding 2024 trends and challenges, healthcare is facing hard times post-COVID and dealing with financial issues. Our new customer is the digital patient; we are working on open health in Brazil and how to achieve system interoperability because of the degree of fragmentation within the health system. The country already has a good healthcare system, although it is not the same everywhere, as some cities and states are quite different from each other.  

When discussing open health, we are talking about the National Health Data Network (RNDS), which is a major initiative aimed at facilitating the exchange of health information across different healthcare providers and systems in Brazil. It aims to improve the quality of care through better data sharing and integration. Other big challenges include medical loss ratio management, and how to provide for life science and healthcare companies within a more equitable system.  

Brazil faces challenges, but Deloitte helps life science companies in pharmaceuticals and biotech, as well as healthcare space payers and providers. If we ask Brazilians what they desire, they will say a house, food, and a health plan, in that order. Our objective is to help with the healthcare wishes of Brazilians. More than 70% of the private sector in Brazil is paid for by companies, and this is typically the company's second biggest expense. That is why we focus on GenAI, which is essential for a company to gain efficiency, as well as in merging and acquisition processes, which reflects a big movement now of payers buying hospitals.  There are payers and other hospitals buying hospitals – we aim to help them, as well as patients, who are often not at the center of the equation but in the margin.  

EF: What is the current state of Brazilian healthcare? What advice would you give to someone seeking investment consultation?  

LJ: There are big gaps in Brazilian healthcare and differences between different regions. Life expectancy in Brazil is almost 77 years, but that statistic differs according to the city, region, or neighborhood. For example, São Paulo has a 20-year difference in life expectancy depending on the neighborhood. The lack of a consistent average presents difficulties in providing equitable services.  

Currently, we are a young country with a young population, but by 2050, we will have fewer younger people and an older population, not to mention a trend in obesity, which will only grow. According to studies conducted, by 2035, 41% of adults will be obese. We have gained life expectancy, but this longevity is not without medical issues. When we talk about hospital beds, the average number of beds for every thousand people around the world is 2.9, and in Brazil, we have 2.1. Some of the largest medical groups are investing in more hospitals in Brazil to close the gap.  

This could be a good investment, but we also have issues with our physician average per thousand inhabitants; now, we have 2.8, which is a good average if we compare with the United States, Korea, and Japan, but within Brazil, depending on the state, there are big differences not just in the number of physicians but what can be treated. We are working on a 5G project, bringing technology to reduce the gaps in some cities and regions and improve access to healthcare. I believe that an investment in health plans is currently not the best area to invest, however, healthcare infrastructure and hospitals are an excellent segment for investment, where it is possible to bring in 12%-25% EBITDA.  

The 5G project started with the Hospital das Clinicas, a big hospital associated with the University of São Paulo. The main core of the project is to use 5G technology to do ultrasounds in remote villages with indigenous populations. The people living in remote villages need help accessing the nearest health center; it is expensive and complicated, and there can be a security risk as they live in protected areas that are subject to exploitation from people who want to deforest the areas where they live. We worked on establishing an economically feasible model to market and expand to different regions with different capabilities. Brazil is a large country, and these projects are critical to providing equity in health and access to treatments in remote areas. 

Cost pressure is a major issue facing hospitals and payers. There was a big decrease during the first year of the pandemic, but during the pandemic, we saw an increase in numbers, and at the end of 2022, many Brazilians had issues paying, with an average of 89%. The challenge has persisted over the last two years, with a decrease in the last quarter of 2023 and the first quarter of 2024. The challenge lies in changing the indicators, although we see a slight decline in the numbers. Comparing numbers pre-and post-pandemic, in 2019, the average was 83%; it decreased by 7.0 points, then a 7.7% increase to 85%, followed by a rise to 87%, to 89%, and a decrease to 87%, which is the present number.  

It is challenging, as payers are facing difficulties balancing this increase in consumption. Hospitals are full, and payers are putting pressure on hospitals to reduce costs or extend payment times. 

EF: You mentioned an aging population, an increase in obesity, and a decrease in payer claims. Do you have any more predictions for the next five years?  

LJ: Autism is a problem now and will increase a lot in the future. Since 2000, it has increased by 317%; payers here in Brazil are declaring that autism claims are higher than oncology. In the future, autism will further pressure the payers and the health system in Brazil, both in the private and public sectors.  

Another trend we are seeing is a big consolidation of market players, not only in merging or acquisition processes but in joint venture movements. Big groups, like Bradesco, Rede D’Or, Fleury, and Oncoclínicas, are making alliances to create new companies to help in some aspect or gain a new revenue line, which could be a big issue in the future.  

Finally, when we talk about the aging population, the problem is, if there is not enough money to pay the providers in the future, what do we do? Matters will only worsen.  

EF: Do you have any success stories on how Deloitte helped multinationals or local companies in mergers or acquisitions?  

LJ: There has been a huge increase in mergers and acquisitions in the healthcare space between 2011 and 2021, but the momentum has fallen over the last three years. Deloitte has a large, specialized team assisting its clients in M&A strategy, financial, anticorruption, technology, operations, commercial, and integration, among many other services. Among our clients are Unimeds, Rede D’Or, Brazil’s biggest hospital group; DASA, Grupo Hapvida Notre Dame Intermédica. Deloitte has helped these companies with their strategy, due diligence, and post-merger integration. 

EF: To what extent do you work in the regulatory landscape? Are you able to provide these services as well?  

LJ: As an independent consultant, Deloitte’s ability to help regulators is the most valuable position that we can have. We work with two big regulators in the Brazilian market, ANVISA, which is the agency for fiscal regulation, hospitals, and several other activities, and we also work with ANS, which regulates private health plans in Brazil. They are the two big agents behind the Health Ministry. 

EF: Deloitte is celebrating its 180th anniversary, as well as over 100 years in Brazil. What does this legacy mean to you?  

LJ: I like to say that I have “green blood.” I love my work at Deloitte; I aim to help the company help our clients, that is my life’s purpose. Health is all I care about. From when I wake up to when I go to sleep, I think about improving the public and private Brazilian healthcare system and how my team and I can collaborate to impact and transform it positively. We are helping people and patients and providing better health for all. It is my purpose, and Deloitte enables it. Deloitte’s motto is “Impact that Matters,” our goal in Brazil is to collaborate with society and systems of all industries.  

June 2024