DaVita HealthCare Partners announced Wednesday that it will expand its international operations to Brazil, taking advantage of recent legislation opening the country's healthcare services to foreign players.
The Denver-based company will focus on bringing its kidney care services to the South American country and has expressed interest in working with the Brazilian government and other payers on integrated care, capitation and shared risk. Recent legislation eliminated prohibitions against healthcare institutions owned by foreign entities and non-physicians.
DaVita is just now surveying the industry climate in Brazil, said Dennis Kogod, president of the company's HealthCare Partners physician group subsidiary and CEO of the DaVita HealthCare Partners' international operations, who talked to Modern Healthcare by phone from São Paulo. The country's largest dialysis chain has under 10 facilities, which means the market is ripe for acquisitions, he said.
“This is a market that will play very nicely to DaVita's two strongest areas,” Kogod said. “Given that there are no chains in Brazil, we think that we'll do a great job of consolidating and aggregating the country's leading nephrologists.”
DaVita is in the beginning stages of gauging how much the country's dialysis centers will sell for, what reimbursement will look like and how currency exchange with the Brazilian real currency will fare, Kogod said. Many international healthcare companies have reported unfavorable foreign exchange rates this past year that have effected their earnings.
Brazil will be DaVita's second foreign market in South America in addition to operations in Colombia.
Deloitte, the global consulting firm, called the Brazilian health care market “expensive, large and in need of improvement” in its 2015 healthcare outlook for the country, with $208 billion in estimated healthcare spending in 2013, an estimated 9.1% of GDP. Three-quarters of the country's 202 million people depend on free care from the country's public health system, according to Deloitte, and the rest are enrolled in private health plans.
Minneapolis, Minn.-based UnitedHealth Group is one of the country's leading private insurers, after a 2012 acquisition of what was Brazil's biggest private plan.
More than 110,000 Brazilians are on dialysis and an increasing about suffer from chronic kidney disease, according to DaVita. The company operates in 11 countries and serves more than 1.5 million patients, and it recently announced an expansion of its renal hospital business in China.
Though DaVita made some notable international expansions recently, its international ventures have proved challenging. In 2014, DaVita lost $25 million on $1.14 billion in revenue from its international business, though Kogod noted that the company has never exited a country where it launched international operations.
“International entry is a marathon, not a sprint,” Kogod said in a previous interview. “A 10-year journey of navigating tricky markets, being very specific and deliberate, focused not on a bunch of dots on the map and picking our markets carefully.”
