Mariana and Marite surveying the market in a favela in Sao Paulo, Brazil

This blog post was written by Mariana Negrão and Marité Pérez  in the Global Social and Sustainable Enterprise MBA program at Colorado State University, who conducted field work for their summer practicum in Brazil. Read part 1 here.

Before journeying to Brazil we understood that the infrastructure of the universal healthcare system was lacking.  It was not meeting the demands of those who most need care, classes C, D and E.  We grasped the depth of disparity in income levels that is so commonly found in developing nations, permitting only those in income levels A and B to purchase or have access to private insurance via employment. This exaggerates the distinction between the ‘haves’ and ‘have-nots’. Based on information provided by the WHO, the World Bank, and IBGE, we were able to identify the growing number of chronic ailments in contrast to the declining number of infectious diseases.  This information was based off of secondary research, which was helpful, but is just the tip of a very deep and skewed iceberg.

While on the ground in Brazil, we were able to understand the positive side of the universal healthcare system in place, but we also started to understand the side effects. It is true that since its implementation in 1988 more people in the country have access to free basic health services, and as a result, mortality rates have declined, life expectancy is on the rise, and infectious diseases are in control. However, much in society has changed since the late 80s: the population is growing fast and migrating towards the city, resulting in a rise of motor vehicle accidents and changes in eating habits, amongst other things. Now, you may be thinking, “how is this any different from what we have experienced in the United States?” The difference is that the system in place has not changed to adapt and accommodate the needs of modern society. “Infectious diseases require treatment, modern diseases require care” said Dr. Paulo Carrara, who is a public health physician and former health secretary of São Paulo. This presents a challenge to the universal healthcare system in place because it is equipped for treatment and not care; However this also presents a great opportunity for social innovations to be implemented.

Delving into deeper waters, we have found that the hierarchical structure of the health care system requires that each municipality be responsible for the primary care of its citizens. There are 5,570 municipalities! To add to that, the system is managed under political constraints that also affect the implementation of new policies. This paints a bleak picture for innovators in the field. Taking an idea to scale is almost impossible amongst a continuously fragmented and incomprehensible structure.

Mariana Negrao having conversations with local residents of a favela.

After collaborating with Facilita Saúde, a local start-up that works as an intermediary between doctors and patients negotiating cheaper prices, we were able to better gauge the environment for innovators in the field. Their business model relies on the same main hypothesis we had for our business: “There are non-insured patients who would be willing to pay a doctor in the private system to be seen sooner”. We found out that having access to free care damages the market perception, and in general the population does not have a real sense of price. In other words, because there is free care, people are not willing to pay a premium for better and faster services as they don’t recognize its worth.  Also, the complexity of the current system makes it difficult for potential consumers to understand new product offerings, therefore, marketing new ways of providing care is continuously misunderstood, requiring a very personal approach in the explanation of a product/service offering.

This brings us to reflect on the reality of our original business plan and its potential in solving the lack of care accessed by classes C, D and E. Our research so far has shown that lowering the prices of private healthcare to the point where people are willing to pay, does not represent a sustainable business model. However, focusing on the peripheries of health care services that are currently not being met by the public health system can illuminate other opportunities for entrepreneurs looking to improve the quality of life of lower income urban Brazilians.