CEO SUMMARY: Healthcare in Brazil remains a free market and thousands of clinical laboratories exist to fill the demand. However, there are early indications that commercial laboratories in Brazil may be on the verge of the same tidal wave of lab acquisitions and consolidation that was experienced in the United States during the past 15 years. The annual lab Congress provides a unique window on this lab marketplace.
IN BRAZIL’S HEALTHCARE SYSTEM, the consumer remains “King” and commercial laboratories compete intensely for lab testing business.
Because there is no government healthcare system in Brazil, individuals are responsible for their healthcare expenses. Many employers provide health insurance. Competition among providers, including laboratories, is fierce. The globalization of laboratory testing services can be seen in Brazil, with its connections to North America, Europe, and Asia.
In recent weeks, THE DARK REPORT had the opportunity to travel to Brazil and attend the 37th “Congresso Brasileiro de Patologica Clinica.” Held in Rio de Janeiro on September 24-27, it attracted upwards of 6,000 pathologists, laboratory scientists, and the Brazilian equivalent of medical technologists.
Laboratory services are highly- developed in Brazil’s best laboratory companies. Lab facilities operated by these companies would compare favorably with any in North America.
The experience of Brazilian laboratories is not only interesting, but offers many insights useful to pathologists and laboratory directors in the United States. First, the free-market nature of the healthcare system allows us to study how modern lab services might evolve if the consumer retains considerable freedom of choice.
Two, the different regulatory environment in Brazil allows laboratories to utilize diagnostic technology still unapproved in the United States (but approved for use in Europe, for example). Three, again, different regulations make it possible for pathologists and clinicians to interact in ways—and across regional boundaries—that might be restricted by state licensure and scope of practice laws in the United States.
One relevant difference is how the market in Brazil has stratified along economic lines. For example, there are lab- oratories organized specifically to serve the upper income segment of Brazil’s population. To make it easy for patients to visit patient service centers (PSCs), these labs have created “diagnostic centers” that include not only laboratory testing, but the full range of diagnostic services involving radiology, ultrasound, endoscopy, colposcopy, and the like.
This works in Brazil because physicians do not draw blood in their offices. All patients who need laboratory testing must go to the laboratory’s collection site to provide a specimen. To make this process convenient, top- end laboratories have built the multi-diagnostic centers referenced above.
The marketing idea is that, for a patient who must undergo multiple types of diagnostic procedures, offering these procedures at one site will encourage the patient to select that lab- oratory over one which only collects blood in its PSCs.
The fact that physicians do not draw blood in their offices affects lab services in another way. Because commercial laboratories do not need to send couriers around to physicians’ offices to pick up specimens at the end of the day, all collections are done in a limited number of PSCs around the city. Laboratories pick up specimens at these centers approximately every two to three hours and return them to the core laboratory.
Core laboratories are organized to perform testing on a flow basis. They test the specimens as they are received from the PSCs. These specimens have been prepped and accessioned at the service center, so they are immediately put on the line in the core laboratory.
Typically a physician gets his lab results for most tests about four or five hours after the patient collection was completed. With most testing completed on the day shift, Brazilian labs do not have to operate the high-volume batch testing done in the evenings and nights at labs in the United States.
Hospital laboratories in Brazil are organized in two different ways. First, there are general, acute care hospitals. In these hospitals, laboratory services are organized much the same as in acute care hospitals in North America. Second, the free-market aspects of Brazil’s healthcare system have led physicians to build specialty hospitals.
Many aspects of the commercial laboratory market in Brazil today resemble that of the United States in the late 1980s.
Most of these specialty hospitals are of modest size and are organized to provide dedicated services in areas such as cardiology and orthopedics. Laboratories in these hospitals offer a limited test menu. In some cases, specialty hospitals have outsourced ownership or management of the laboratory to a commercial laboratory company.
During this trip, THE DARK REPORT visited several laboratories in Sao Paulo and Rio de Janeiro. Many aspects of the commercial laboratory market in Brazil today resemble that of the United States in the late 1980s. During the past four years, three laboratory companies have used acquisitions to build themselves into a large size, relative to most laboratory companies in the country.
One striking conclusion developed during this trip to laboratories in Brazil is simple: no matter how different the health system and the local culture, the strategic management issues for laboratory administrators and pathologists are uncannily similar. Doing more with less money is a common theme in any healthcare system.