By Ben Tavener, Senior Contributing Reporter
RIO DE JANEIRO, BRAZIL – The United States’ biggest private medical company, UnitedHealth Group (UHG), and Amil Participações S.A., the biggest healthcare operator both in Brazil and Latin America, have agreed to merge, according to company statements. Minnesota-based UHG said it had reached an agreement to acquire a ninety percent stake in Amil at a cost of some US$4.9 billion.
If regulator approval in Brazil is given, UHG will buy the shares in cash in two stages starting at the end of 2012.
Stephen J. Hemsley, UHG President and CEO, appeared excited about the opportunity of merging with Amil, saying Brazil’s “growing economy, emerging middle class and progressive policies toward managed care make it a high potential growth market” with an “under-penetrated market of nearly 200 million people.”
Both UHG and Amil shares responded positively to the news. The merger follows three years of talks between the two companies.
Amil founder, billionaire Edson de Godoy Bueno said the union with UHG would enable Amil “to bring advanced technology, a tradition of practical innovation, service initiatives and clinical programs to further strengthen health care in Brazil.”
“[It will] enable Amil to grow faster and do more to care for patients and serve consumers as a leading Brazilian company,” added Dr. Bueno, who is set to join UHG’s board of directors, as well as continuing to run Amil from Brazil.
Amil currently provides medical and dental services for thousands of hospitals, clinics and laboratories across Brazil, as well as having 5.8 million members in Brazil across seven states – including Rio and São Paulo – and the Distrito Federal, and despite being the market leader, the company says the size of its market share, at only nine percent, means there is much room left to grow.
A private-sector oncological surgeon, Dr. Reitan Ribeira, tells The Rio Times, “The immediate repercussions of the takeover are not fully clear, but I would expect care at Amil to improve as a result, with expertise from America speeding up procedures, recovery times and therefore reducing costs.”
“However, this acquisition should act as a warning shot for other Brazilian medical companies that if they fail to improve their services and fight the upcoming price war, other foreign companies are likely to come into the market and do the job they can’t provide,” he offers.
The news comes as private doctors in most of Brazil’s states are set to embark on a 15-day strike from October 10th to protest against pay rates and working conditions. Appointments and non-urgent surgery will be suspended, although emergency cases will be admitted.
Doctors say that despite medical plans increasing in price by some fourteen percent a year, this increase is not being passed on, and that conditions and the numbers of patients being seen in private hospitals and clinics are becoming unmanageable. They are calling for a fifty percent adjustment in salaries.
Brazilians are offered a free-at-point-of-use health system, called SUS, similar to those operating in the UK or Canada. However, underfunding means conditions are often poor and waiting lists long, with emergency departments often particularly affected.
The result is, many Brazilians that can afford to, pay out for private medical and dental insurance, but so many people now have the policies that reports of doctors and surgeons asking for extra money to go ahead with certain procedures have regularly emerged in recent years.