Brazil welcomes foreign investments in hospitals



Brazil has recently enacted new legislation authorising international private investors to acquire and operate healthcare facilities in the country. The market for private healthcare in Brazil had reported revenues of approximately US$40bn (R127bn) in 2014 and has an ever-growing client base currently estimated at 72 million people – a little over 34 percent of the country’s 204 million population.

According to recent data gathered by the Brazilian Federation of Supplementary Health Care – a private, non-profit union which represents the majority of Brazil’s private healthcare operators – this market has been steadily growing at a rate of more than 3 percent per year over the last few years, particularly in the dental segment, which is currently used by a smaller portion of the population: just 21 million people.

Brazil follows a publicly funded model of healthcare, whereby the government is legally required to provide assistance to all individuals through State-owned facilities, free of charge to patients. This universal right was included in the Federal Constitution of Brazil of 1988 (Article 196), which was nicknamed the ‘Citizenship Constitution’, due to the fact that it was approved following the end of the military dictatorship in Brazil (1964-1984) and, as a result of the new political climate at the time, the Constitution sought to provide an extensive list of individual rights and liberties for all Brazilians, with no regard to the economic feasibility of their implementation by subsequent governments. Those public healthcare services are presently offered by the government through what is known as the Unified Health Care System (SUS), the basic operational rules of which are set forth in Law N. 8,080, dated 19 September 1990.

Despite the duty to provide free healthcare to all citizens imposed by the Constitution of Brazil, the same document authorised (in Article 199) local private entities to operate a secondary, supplementary market of private (paid) healthcare, which is regulated by Brazil’s National Agency of Private Health Care as per Law N. 9,961, dated 28 January 2000, and by Law N. 9,656, dated 3 June 1998. This authorisation has resulted in the creation of a whole new segment of better quality, private services, since the precarious conditions at public hospitals – with long lines, lack of qualified professionals, poor facilities and a general absence of resources – have driven most of the higher income classes to private healthcare providers.

Until now, the Federal Constitution had restricted foreign ownership of such private facilities to a handful of situations authorised by specific laws enacted by Congress (Article 199, third paragraph). The few exceptions allowed for foreigners to maintain equity investments in health plan operators (as was the case in 2012 when Amil Participações S.A. – Brazil’s largest independent healthcare operator – was acquired by the US group, United Health Care, which took the controlling share), or to provide loans or similar debt deals to local players (such as the convertible debt investment made by BTG Pactual bank in Brazil’s hospital group Rede D’Or, in 2010).

This has now changed with the enactment of Law N. 13.097, on 20 January 2015, which is already in effect, and which modifies the SUS regulation (Law N. 8.080/90) to create several new possibilities for foreign investment in Brazilian private healthcare establishments. Based on this new law, foreign investors may, directly or indirectly, hold full or partial ownership of any private general or specialised hospitals, including philanthropic and not-for-profit establishments, as well as general or specialised clinics, policlinics, human genetics labs, entities that produce and supply drugs and other health products, clinical analytical labs, anatomical pathology labs and diagnostic imaging facilities, among others.

In addition, investments in Brazil have become increasingly desirable after the recent dip in value of the local currency (the Brazilian Real) against the US dollar. Data gathered by the Central Bank of Brazil indicates that the exchange rate has climbed from R$1.9 to US$1.0 in 2010, to a rate of R$3.2 to US$1.0 in 2015. Moreover, local economists are predicting that this ratio will continue to increase in the coming months. As such, Brazilian assets have shown a significant reduction in price from the point of view of foreign investors.

Local experts expect that these changes to the law, combined with the macroeconomic scenario, will result in the arrival of several major health groups and private equity investors in the country in the coming months, with a consequent increase in the need for qualified legal advice to assist with the subsequent transactions.


Marcelo Rechtman is a partner at Cascione, Pulino, Boulos & Santos Advogados. He can be contacted on +55 21 99500 5332 or by email:

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Marcelo Rechtman

Cascione, Pulino, Boulos & Santos Advogados

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