It should be a healthcare market eminently ripe for a technological lift.
But Brazil's ambitions to bring its healthcare economy into the 21st century will require intermediate structural steps before most hospitals and other caregivers can benefit from information technology, observers say.
Brazil, with the largest economy in South America, has begun to overhaul a struggling $23 billion public health system, priming the market for information systems that facilitate government goals of decentralization, consolidation and cost control.
The effort is backed by a $350 million loan from the Inter-American Development Bank, which works with the International Monetary Fund to back economic reform projects in Latin America. Including government commitments, funding for the health sector reform plan approved last October totals $750 million.
The government effort intersects a flourishing private healthcare insurance market that covers 25% of the nation's 165 million people.
In the new marketplace, "information technology would need to be of the highest quality, and administration, very professional," according to a report about Brazilian healthcare reform written by the Institute of the Americas, a U.S.-based think tank promoting private-sector roles in economic development in the Western Hemisphere.
Before that vision can edge closer to fruition, however, there's a big gap to bridge. Therein lie the problem and the opportunity.
For one thing, basic healthcare clinical automation is rare in Brazilian hospitals, leaving a wide opening for vendors of software such as laboratory systems that are saturating the U.S. market.
The market potential is obvious, says Paulo Felipe Jr., M.D., a Brazil-based healthcare information systems consultant. "Brazil has about 7,000 hospitals, and only 7% to 8% of these hospitals have any kind of information systems."
What's more, hospital information systems developed in Brazil are fine for applications such as payroll and materials management, which are common to all industries, but domestic companies have a poor track record of developing systems that require a thorough understanding of healthcare processes such as patient registration and admission and discharge tracking, says Joe Warren, a Miami-based healthcare information technology consultant.
"Local healthcare information systems companies do exist, but they are not successful, and customer satisfaction is very low," says Warren, a principal with the Consortium of Independent Consultants, which operates in Latin America.
No company has a major market share. "Everyone has two or three customers, and all of them are unhappy," he says.
A gap to bridge. Despite all that, observers caution against giddiness about the opportunity for healthcare information products and services.
Most of the nation's hospitals are small and inefficient, and far from coalescing into the networks of larger institutions considered necessary to operate in the new marketplace, according to the report from the Institute of the Americas, based in La Jolla, Calif.
"Most private hospitals in Brazil do not have the tools to be competitive, nor the capacity to implement the necessary processes that will make them so," the report says.
Among private hospitals, the average percentage of revenues invested in information technology ranges from 0.8% to 1.5%, Felipe says.
"Many of Brazil's small hospitals are not likely to survive in the new marketplace unless consolidated into chains," the report concludes. "Over 70% of Brazil's hospitals have fewer than 70 beds. Hospitals with more than 200 beds represent 3% of facilities."
Academic institutions average more than 300 beds, but they represent only 2% of all hospitals (See charts). At the other extreme, publicly operated hospitals average about 50 beds.
Changes may be on the horizon, but few hospital administrators are aware of the role computer systems can play in handling their operations, Warren says. "Directors of healthcare do not understand the value of information technology," he says. "They are starting to wake up to it, but they're not there yet."
Well-attended conferences covering information technology during the past three years have exposed administrators to potential healthcare applications, but most hospitals still balk at prices exceeding $1 million for an information system, Warren says. Chief information officers, who serve as expert resources and technology champions in the U.S., are a low priority for hospitals and thus not a strong career path in Brazil.
While the top 10 hospitals in Brazil have CIOs and big information systems staffs, they usually have developed their own applications rather than look outside the country for available alternatives.
Last but not least, Brazil is rebounding from a severe monetary crisis in which part of the cure has been an inflation-taming policy that has left local institutions strapped for investment capital. Warren says the economic situation is partly behind one hospital client's decision to suspend an information technology strategy project.
The long-term outlook may be rosier, however. As Brazilian healthcare reform unfolds, however slowly, it will foster the development of larger regional hospitals and health systems, says Roberto de Almeida Rocha, M.D., CIO of Hospital de Clinicas in Curitiba and a professor of healthcare informatics at the Federal University of Parana in Curitiba.
"There will be consolidation, that's for sure," Rocha says. "We definitely have too many (health) plans and too many providers."
Hospital consolidation will introduce problems in managing larger patient volumes in multiple-institution networks, Rocha says. "That will force IT to come in."
Reform needed. Healthcare is a constitutional right in Brazil, but that cornerstone has been crumbling because of federal funding shortages, lack of access to providers for nearly half the population and the tendency to treat advanced illness instead of averting it.
"The public sector is in no condition to afford healthcare for all the inhabitants in Brazil," Felipe says. "New formulas must be created to guarantee minimum healthcare services to the main population."
The Brazilian Ministry of Health's plan includes finding ways to integrate preventive efforts with the dominant curative approach; 80% of the current system's activity involves "treating people whose illnesses are perfectly avoidable with better prevention," the institute notes.
Integration would require reorganizing hospitals around the efficient provision of complex care while improving a basic set of healthcare services under the country's Unified Health System, known as SUS. To that end, Brazil is reorganizing its health infrastructure, including delegating to its 26 states the responsibility for making the best use of healthcare resources.
"Brazilian policymakers and providers agree that (improving) efficiency in the use of these resources, and their distribution, is as great a problem as increasing resources to the health sector," according to the institute report. It adds that while there's "still no clear trend" toward the formation of networks, "there is a general feeling that such networks will soon be important."
Private-sector engine. Public and university hospitals account for only 25% of all hospital beds, so SUS relies on contracts with private hospitals to provide services.
At Hospital de Clinicas, for example, SUS supplies more than 80% of the revenues for the 600-bed university hospital in Curitiba, about 200 miles southwest of Sao Paulo, Brazil's largest city. "It's just like Medicare," says Rocha of SUS. "But it's Medicare for everybody."
Well, not everybody, as it turns out.
About 42 million people are now covered under private health plans, nearly 10 times the number covered in 1992. More than 80% of them live in the populous southeastern region, which includes Sao Paulo and Rio de Janeiro, where nearly half the private hospital beds are situated.
The region is on the leading edge of private healthcare, and its top independent hospitals in Sao Paulo are pursuing private patients rather than participating in the public system, the institute report says.
Those facilities already have a modern base of computerization, including clinical applications, Rocha says.
Elsewhere, "very few hospitals have laboratory systems, pharmacy systems and radiology systems," he says. Administrators "really don't even know what they need and how it should be done."
Felipe says the healthcare market-hospitals, HMOs and physicians-has rapidly split into two main groups. In the first are providers that saw healthcare changes coming and recognized they had a short time to rise to the level of efficiency and service that organizations outside Brazil can offer.
In the second group are those that "only can see one or two steps ahead in the changing environment we are living in now."
Unless providers rise to standards attainable by harnessing information, Brazilians may be at a disadvantage against foreign competition, Felipe says. For example, heart surgery can be performed less expensively in Cleveland than in some referral centers in Brazil. So why have the surgery in Brazil, he asks, if a health plan allows a patient to choose a U.S. center of excellence?
In addition, U.S. managed-care organizations have experience in using patient historical data to mitigate contract risks and have an edge over Brazilian HMOs that are just beginning to invest in patient clinical data, he says.
Market potential. For now, the investment opportunity for investors and vendors from outside Brazil rests in the 12% of hospitals that have more than 150 beds, Felipe says.
"Almost all of them understand very clearly the role of healthcare informatics and the need to invest in it as part of their strategy to grow and survive the market changes," he says.
Foreign companies that are interested in opportunities in Brazil are mainly from European countries. Those companies include the French firm that markets diagnostic image management and that Felipe represents. The European push, which started about three years ago, has a base of language and cultural similarities, as well as historical links to Brazil, he says.
No big names from the U.S., such as McKesson HBOC or Shared Medical Systems, are in the market, he adds.
Domestic information technology vendors have built basic patient-accounting and resource management systems designed to fit local payer requirements and healthcare policies, but generally the applications use older technology and are difficult to expand into healthcare network environments, Felipe says.
Laboratory systems also are old-fashioned and "are very poor regarding communication among other systems within the hospital," he says.
Other types of systems such as radiology, intensive-care, clinical records and diagnostic image management are virtually unheard of, as are systems to facilitate network integration, such as interface engines. In fact, the market first must be educated about what an interface engine is and how it works, he says.
Domestic companies were long protected from foreign competition, but the government several years ago began to open the country to foreign competition without federal interference.
"The age of protectionism is over," Felipe says. "Nowadays, the government believes that only the good companies-well-structured and that offer good services with quality and good prices-will survive."