Health plan entrepreneur says he is afraid to undertake – 06/18/2023 – Market

One of the oldest entrepreneurs in the private health market in Brazil, José Seripieri Filho, the founder of Qualicorp known as Junior, attributes the current crisis faced by health plans to regulation, which ended 2022 with an operating loss of R$ 11.5 billion , the worst in 20 years, according to the ANS (National Supplementary Health Agency).

For him, the bill on the sector that is being discussed in the Chamber of Deputies should worsen the imbalance, harming the operators, who may not be able to support it. The businessman suggests strengthening the regulations for hospitals, doctors and pharmaceutical companies operating in the market.

“Supplementary health is no longer a problem for the ANS with the operators. It is already a long-term problem for the government, for the sector’s sustainability on one end and accessibility on the other end”, he says.

Seripieri left Qualicorp in 2019, opened QSaúde in 2020 to sell individual plans and has just left the sector again. He sold the portfolio of QSaúde beneficiaries to healthtech Alice this year, but no longer expresses the same desire to return to the business.

“Depending on the opportunity, it could even be, but today it scares me more than I want to undertake in this area”, he says. He sees distortions in readjustments and lack of interest on the part of large operators in the market for individual plans.

The new annual readjustment of individual plans, released by the ANS last Monday (12), was 9.63%. What did you think of the rise? There is a technical calculation, but the premises and the result do not correspond to reality. It is inexplicable that a mass of 9 million customers of individual plans, older and with a more accentuated use, receive a lower readjustment than the 43 million [de usuários dos planos coletivos], which have a readjustment of 20% to 30%. I cannot question the technicality of the ANS, but looking from the outside: either the individual is underpriced or the collective is overpriced.

Of the more than 50 million customers who have private healthcare, only 18% are on the individual plan. It’s a small, low-adherence product. It is a wallet that has been aging over the years. The ANS gives a readjustment that, year after year, according to the operators, is hyposufficient. In 22 years, which is the age of ANS, the portfolio is becoming increasingly outdated from an actuarial point of view. And with the low commercialization, there is no oxygenation of this individual portfolio. There is one more variant: from the Statute of the Elderly, in 2004, the readjustment is prohibited [por faixa etária] over 59 years old.

Companies are not interested in selling the individual? This is a market destined to to finish? Smaller companies still market the individual, but it is very little in terms of volume of people. Big corporations have no interest, they don’t trade. Today there is an increasing concentration in large economic groups in the health area.

That was why Mr. did you sell your QSaúde wallet? It was because of this account that close? There should have been a lot more investment, which I didn’t want to do.

What is the problem with this market? Why does the consumer feel that the price is always high for an inadequate service and, on the other hand, the sector faces financial difficulty? Paradoxically, the higher the barrier of pro-consumer regulation is, the greater the obligations of an operator, the more difficult it is for new entrants to the market, because it is expensive. It has a limit to offset this in the price. It has a disastrous side effect for society.

A company has to have predictability, that’s why there are actuarial calculations. In the regulatory aspect, the market today is already exaggeratedly regulated.

At the other end, there is the medical provider network, which does not suffer any kind of regulation, but it impacts 80% to 90% of an operator’s expenses, that is, for every R$ 100 that an operator collects, it spends between R$80 and R$90 with a medical provider. From an office to a highly complex hospitalization. What is left for it does not pay the technical reserve that it has to set up in the ANS, administrative, operating and commercial expenses.

There is a regulatory imbalance. It’s no use regulating just the operator. Either you regulate all entities in this economic chain, including medical providers and the pharmaceutical industry, or you will overload a single entity in this entire chain, which cannot withstand it.

The ANS has a thousand rules on operators and none on providers. And today, bill 7,419/06 is on the rise, to redo legislation overloading operators. Who will suffer the most is the consumer, and there will be more and more market concentration. Few giants will dominate the market.

Is the rest of the chain no longer regulated? No. They have sanitary control by Anvisa, in addition to city and fire permits. However, in supplementary health, the whole chain is not regulated. It’s not even monitored. If, for example, a hospital raises an operator’s table by 30% or 40%, it cannot pass this adjustment on to the individual plan. Return to the collective. If a hospital is caught defrauding an operator or produces an abusive readjustment, the operator cannot disqualify it.

What about doctors who give two receipts for a single appointment? Can operators not question them? Exactly. Queries are an example. There are cases of charges for procedures that did not even exist, and there is no way for the operator to earn in loco whether it happened or not.

In the hospital case, even if there is fraud or an absolutely abusive increase, the operator can only disqualify with prior authorization from the ANS, which in practice does not happen. This increases impunity and a chain of fraud. And there is still an excess of judicialization, in which a one-page medical statement is enough for the judge to issue an injunction and proceed with a procedure. Once performed, the hospital charges the operator, even if it is outside the contract and even if it is not [esteja] provided by ANS.

We return to the question of regulation. Either the regulation is made more flexible, so that more people have access, or the entire chain has to be regulated, so that this regulatory barrier is fair and balanced.

Supplementary health is no longer a problem for the ANS with the operators. It is already a long-term problem for the government, for the sector’s sustainability at one end and accessibility at the other end.

This defense of regulatory change, which is an old claim in the sector, has among its suggestions the release of mandatory technical reserves for operators. That might solve the current crisis, but wouldn’t it be needed in the long run? This fund takes money from the system and the operator for nothing, because it is not used. There are R$ 100 billion stopped in the bank without any purpose because, in practice, it does not serve the system, since countless operators went bankrupt without the ANS having used this money. And the SUS has a huge shortage of funds. Either they reduce and release this reserve to the private system, which will revert to a lower price, or they distribute this money to the SUS.

In the scarcity of the individual plane, is there another arrangement of the so-called false collective? A lot of people opened CNPJ at the Federal Revenue just to celebrate a collective micro-enterprise plan that, in practice, is an individual masquerading as a collective. It’s just a person, but the operator understands them to be legal entities. In this way, the readjustment is made by the pool of SME contracts of up to 30 lives, which can rise from 20% to 30%. In some cases, risk selection is carried out, that is, those who are sick do not enter, something that in the individual and in the adhesion is strictly prohibited.

In practice, although there are legitimate SMEs, the chaff mixes with the wheat. The operator has an obligation to control whether this CNPJ is active or not. But we know that a large percentage of these CNPJs only existed for the celebration of the collective health plan. It’s a way to bypass the system, because it should be a contract with the CPF.

Until 1998, before the new law, the individual plan was what sold the most in Brazil. That’s why I say that regulation and the market’s modus operandi are increasingly inhibiting accessibility. When a priceless readjustment comes, the customer downgrades the plan. First, at the operator, then he goes to a verticalized group medicine.

Mr. is one of the oldest entrepreneurs in the sector, founded Qualicorp in the 1990s, left in 2019 and later opened QSaúde. This year, he sold his QSaúde portfolio. Are you thinking of returning to the industry in any way? It wouldn’t be via plan individual? I just can’t compete with Qualicorp because I have a non-compete signed with it [cláusula que o impede de atuar na concorrência]. I couldn’t come back as a benefits administrator for a while. As an operator, I would say that, theoretically, not today. But sometimes opportunities arise. And depending on the opportunity, it might even be. But today it scares me more than I want to undertake in this area.

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X-RAY | JOSÉ SERIPIERI FILHO

He was CEO of the health plan management company Qualicorp, which he founded in 1997, and left the business in 2019 after selling his stake to Rede D’Or. The following year, he founded QSaúde, whose customer base was sold to healthtech Alice. Before, the businessman carried out activities as a marketer, police clerk and door-to-door salesman of health plans.