The Brazilian Health Care System

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This report provides an overview of the historic basis of the

The Brazilian Health Care

System – possibilities for collaboration

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Dnr: 2013/253

Swedish Agency for Growth Policy Analysis Studentplan 3, SE-831 40 Östersund, Sweden Telephone: +46 (0)10 447 44 00

Fax: +46 (0)10 447 44 01 E-mail: info@growthanalysis.se www.growthanalysis.se

For further information, please contact Mikael Román or Martin Wikström Telephone: +55 61 3442 5211 / +46 10 447 44 73

E-mail: mikael.roman@growthanalysis.se / martin.wikstrom@tillvaxtanalys.se

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Foreword

This report provides a broad overview of the health care system in Brazil and was commis- sioned by the Ministry of Health and Social Affairs. The report provides an account of the historic basis of the Brazilian health care system as well as the current organization, including both private and public components. Furthermore, it describes and discusses current challenges relating to, for instance, heterogeneous access to health care, the private-public dichotomy, the funding situation, the situation for the pharmaceutical industry, foreign investments, as well as research, development and innovation. Questions relating to the ageing demography as well as to children are also discussed.

The report suggests various health care-related areas where an increased collaboration between Sweden and Brazil could be of interest for both countries.

The report was written by Mikael Román at the Swedish Agency for Growth Policy Analysis office in Brazil assisted by Jessica Freire. Martin Wikström has been the overall project leader.

Stockholm, October 2013

Enrico Deiaco

Head of division, Innovation and Global Meeting Places Swedish Agency for Growth Policy Analysis

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Summary

• The Brazilian Unified Health System, Sistema Único de Saúde (SUS), established in the Brazilian Constitution of 1988, was an important expression of the Brazilian demo- cratization movement in the 1980s and was, as such, spearheaded by health professionals and civil society movements.

• As a result, the SUS holds a series of particular traits: 1) it defines comprehensive, universal preventive and curative care as a constitutional right for 200 million Brazili- ans, thereby making the SUS one of the largest public health care systems in the world;

2) it stresses decentralized management and provision of health services along with community participation at all administrative levels; and 3) it operates through a particular mix of public and private participation, incentivized and supported even finan- cially by the state itself, in which the private sector enters as a complementary and competing actor, fulfilling some of the tasks that the public sector may not be able to take on.

• The implementation of the SUS has since its inception been complicated by: 1) chronic underfunding; 2) inherent inefficiencies in the public-private service delivery model, essentially manifested in the inability to connect the two sectors; 3) similar short- comings in the decentralized governance model, where communication and collaboration between different administrative units often are seriously hampered; and 4) a structural concentration of health services to more developed regions.

• Despite these limitations, the SUS has made considerable progress and achieved to: 1) significantly expand the capacity of the system; 2) vastly improve access to primary and emergency care; 3) reach universal coverage of vaccination and prenatal care; and 4) make considerable investments in human resources and technology, including the domestic production of strategic pharmaceutical products.

• Apart from the above, current managerial challenges and opportunities include: 1) access to competent personnel at all levels of the system; 2) the development of quality improvement measures along with systems for evaluation and continuous assessment;

and 3) the many issues pertaining to increased investments in research, development and innovation.

• At the same time, medical challenges are changing at a fast pace, thereby raising new demands on health sector policies. Some of the more critical are: 1) the rapidly aging demography; 2) growing urbanization rates; 3) an increasing frequency of overweight and obesity; 4) a rapid increase in chronic and non-communicable diseases; and 5) violence and accidents following from extensive alcohol abuse.

• To conclude, we see from the Swedish perspective at least four areas of potential collaboration: 1) issues related to governance and decentralization in the health sector;

2) the development of quality improvement measures along with systems for evalua- tion and continuous assessment; 3) increased research and educational collaboration, mainly through the program “Science Without Borders”; and 4) several commercial

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Sammanfattning

• Det brasilianska vårdsystemet, Sistema Único de Saúde (SUS), som bildades genom den brasilianska grundlagen 1988, var ett viktigt uttryck för demokratiseringsrörelsen på 1980-talet och drevs som sådan på av yrkesarbetande inom vården och det civila samhällets organisationer.

• Som ett resultat av detta präglas SUS av en rad särskilda egenskaper: 1) det definierar omfattande, universellt förebyggande och botande vård som en grundlagsenlig rättig- het för 200 miljoner brasilianare, och gör därmed SUS till ett av världens största system för offentlig sjukvård, 2) det betonar decentraliserad förvaltning och tillhanda- hållande av vårdtjänster tillsammans med deltagande från samhällets sida på alla administrativa nivåer och 3) det drivs av en speciell blandning av statligt och privat deltagande, som stimuleras och stöds ekonomiskt av staten och där den privata sektorn går in som kompletterande och i viss mån konkurrerande aktör, och därmed fullgör vissa av uppgifterna som den statliga sektorn inte kan åta sig.

• Implementeringen av SUS har sedan starten försvårats av: 1) ständig underfinansie- ring, 2) inneboende ineffektiviteter i den statliga-privata tjänsteleveransmodellen, som framför allt kommer till uttryck i oförmågan att koppla samman de två sektorerna, 3) liknande brister i den decentraliserade styrningsmodellen, där kommunikation och samarbete mellan olika administrativa enheter ofta har allvarliga problem och 4) en strukturell koncentration av vårdtjänster till mer välutvecklade regioner.

• Trots dessa begränsningar har SUS gjort betydande framsteg och lyckats: 1) genom- föra en betydande utbyggnad av systemet, 2) förbättra tillgången till primärvård och akutvård kraftfullt, 3) uppnå universella vaccinationsprogram och program för mödra- vård och 4) göra betydande investeringar i personal och teknik, inklusive inhemsk pro- duktion av strategiska läkemedelsprodukter.

• Utöver ovanstående inkluderar nuvarande utmaningar och möjligheter: 1) tillgång till kompetent personal på systemets alla nivåer, 2) utvecklingen av åtgärder för kvalitets- förbättring tillsammans med system för utvärdering och bedömning och 3) de många frågorna som gäller ökade investeringar inom forskning, utveckling och innovation.

• Samtidigt förändras de medicinska utmaningarna snabbt och därmed ökar kraven på vårdsektorns policyer. Några av de viktigaste utmaningarna är: 1) den snabbt åldrande demografin, 2) urbanisering i en allt snabbare takt, 3) en ökande förekomst av övervikt och fetma, 4) en allt snabbare ökning av kroniska och icke smittsamma sjukdomar och 5) våld och olyckor som följer av alkoholmissbruk.

• Avslutningsvis ser vi ur svenskt perspektiv minst fyra områden för eventuellt sam- arbete: 1) frågor rörande styrning och decentralisering inom vårdsektorn, 2) utveck- lingen av kvalitetsförbättringsåtgärder tillsammans med system för utvärdering, 3) ökat samarbete inom forskning och utbildning, huvudsakligen genom programmet

”Vetenskap utan gränser” och 4) flera kommersiella möjligheter, huvudsakligen inom den brasilianska hälsobranschen.

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1 Introduction

One of the strongest messages coming out of the riots in June 2013, when millions of Bra- zilians took to the streets to protest against the government’s neglect of social policies, was that health issues are increasingly back in the center of the Brazilian political debate. The manifestations, which started at the inauguration of the Soccer Confederation Cup, questioned the government’s recent investments in large sports events, such as the 2014 Soccer World Cup and the 2016 Summer Olympics, and claimed that the money instead should have been used to improve education and the country’s ailing health system (Leahy, 2013b).

There are several reasons to believe that health issues will receive continued and specific attention from here and onwards. One is the sheer size of the Brazilian Unified Health System, Sistema Único de Saúde (SUS), that is effectively one of the world’s largest pub- licly financed health care systems. A second aspect concerns the specific role that health issues have in Brazilian politics, often transcending ideological differences and party affiliations. Finally, health care will most certainly be a central issue in next year’s Presi- dential elections, which largely will be an assessment of the current government’s performance, and where many of the issues raised in the previously mentioned riots will again be brought to the table (Leahy, 2013a).

The overall purpose of the present report is to discuss ongoing development in Brazilian health policies with particular focus on the country’s health system. What are the present challenges and opportunities? What particular policies are currently introduced and for what purpose?

The report falls out in three parts. First, it provides a brief background of the Brazilian health care system itself, consisting of: 1) a historical overview of its foundation; 2) a description of the system itself; and 3) a summary of its achievements up to this date.

Thereafter we discuss some of the principal challenges and opportunities confronting the system. Finally, based on the previous discussion, the report makes some concluding re- marks on potential implications for Sweden.

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2 Background

2.1 Historical foundation

Many of the contemporary challenges in the Brazilian health system, as well as the particular role that health issues exert in the Brazilian political debate, are largely functions of the circumstances when the SUS was created.

The critical event in this case is the process leading up to the reintroduction of democracy in the 1980s. In this setting, the country’s precarious health system soon became a symbol and practical illustration of the fragmented and unequal society created by the military regime (1964–1985). This had several implications. First, it meant that the subsequent demands for universal health care was based in a struggle of social rights, in which the broader understanding of ‘health services’ extended to also include social and political issues, such as education and poverty alleviation. This also meant, in practice, that the principal champions for health issues were social movements, and civil society at large, rather than health profession, political parties, international organizations – or even government itself.

This particular conception of health issues, in combination with the specific configuration of societal interests, occasionally referred to as the informal Health Party (Partido sani- tarista), would have a critical impact on the subsequent development of the SUS. The latter effort, based on a complex network of complementary and competitive service providers and purchasers throughout the federal system, was at the time largely at odds with the post-welfare health sector reforms taking place in the rest of the world. Free and universal health care was, through Article 196 in the Brazilian Constitution of 1988 (Brasil, 1988), ultimately defined as a constitutional right for what today amounts to nearly 200 million Brazilians, thereby making the SUS one of the largest public health care system in the world (Fleury, 2011).

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1970 1980 1990 2000 2010 Demographics

Population 95 993 400 (1971) 121 611 375 147 593 859 170 143 121 190 732 694

Age

0–4 years (n[%]) 13 811 806 (14.4%) 16 423 700 (13.5%) 16 521 114 (11.2%; 1991) 16 375 728 (9.6%) 15 687 927 (8.2%) 60–69 years (n[%]) 3 007 637 (3.1%) 4 474 511 (3.7%) 6 412 918 (4.3%; 1991) 8 182 035 (4.8%) 10 625 402 (5.5%)

≥70 years (n[%]) 1 708 571 (1.8%) 2 741 506 (2.3%) 4 309 787 (2.9%; 1991) 6 353 994 (3.7%) 8 802 684 (4.6%) Infant mortality

(n per 1000 livebirths)

113.90 (1975) 69.10 45.22 27.4 19 (2007)

Fertility rate 5.8 4.35 2.85 (1991) 2.38 1.86 (2008)

Life expectancy (years) 52.3 62.6 66.6 70.4 72.8 (2008)

Men (years) .. 59.7 63.1 66.71 68.7

Women (years) .. 65.7 70.9 74.35 76.4

Life expectancy at age

>60 years (years)

.. 76.4 78.3 80.4 81.01

Men (years) .. 75.2 77.4 78.3 79.3

Women (years) .. 77.6 79.9 81.7 82.3

Urban population 55.9% 67.5% 75.5% 81.2% 83.8%

Gini index 0.57 0.59 0.64 (1991) 0.56 (2001) 0.55 (2008)

Gross domestic product per head (parity purchasing power; US$)

2061.56 (1975) 3671.14 5282.68 7366.20 10 465.8 (2008)

Poverty rate (%)ǂ 67.9% 39.4% 45.4% 34.0% 30.7%

Figure 1 Demographic, social and macroeconomic indicators in Brazil, 1970–2010. Based on Paim et al 2011, p. 1780.

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2.2 The system: a brief description

The struggle over the last 25 years has been to put the constitutional ambitions and the SUS into practice. Brazil is, to start with, a highly heterogeneous country of continental size, with major regional differences, and a diverse set of socio-economic contexts, that each present distinct and differentiated needs. Furthermore, the country has all the major administrative challenges inherent to any federal system while, at the same time, it strug- gles with financial constraints and lack of competent personnel in line with the characteristics of an emerging economy. Parallel with this, the demands for extended health services are growing at a rapid pace.

In response to these challenges, and very much in line with the political transition and the redesign of the Brazilian Federation during the 1990s, the country’s health system has over time evolved along two basic traits.

A first component is the particular mix of public and private participation, incentivized and supported by the state, in which the private sector enters as both a complementary and competing actor, fulfilling some of the tasks that the public sector may not be able to take on. In terms of financing and service delivery, the SUS has three subsectors: 1) the public subsector,¹ in which services are financed and provided exclusively by the state at all lev- els of government and to which citizens have free access; 2) the private coverage sub- sector, where services are delivered by private actors, and for which citizens have to pay to gain access; and 3) a mixed (for-profit and non-profit) subsector, in which services, although provided by private actors, could be financed by either public or/and private funds, and to which citizens have free access to all services financed by the state. As for services financed by both public and private actors, citizens will have to pay for treatment in accordance with the difference between the two funding streams (Paim et al., 2011).

This state protection of the private sector, in which private actors are provided both a market as well as occasional financing, while still remaining subordinated to public regulations and political goals, has many innovative features. Although organizationally distinct, the public and private components are interconnected, insofar that people can use services in all three subsectors, depending on ease of access or their ability to pay. In practice, many services, such as ambulatory facilities and diagnostic practices, are effectively outsourced by the public sector to private entities, with the express purpose to increase efficiency in the system as a whole (Victora et al., 2011).

A second component is the emphasis on a highly decentralized administrative structure intended to support optimization, complementarity and public participation at all levels.

This has in turn generated considerable institutional changes in the governance structure of the public subsector, such as the establishment of health councils and inter-managerial committees at all levels of government. The changes have not only provided a greater number and variety of stakeholders with better access to the decision-making process, but also clarified areas of institutional responsibility. The ambition is to create a general awareness about every level of government’s responsibility to support the implementation national health policies (Paim et al., 2011).

1 For clarification, it should be noted that in daily conversations the public sector part of the Unified Health System is occasionally referred to as SUS. However, in the present work the term refers to the system as a whole.

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These institutional and financial aspects of the Brazilian health system have direct implications on its infrastructure and the delivery of services. In practice, there is a division of labor, where – somewhat simplified – the public subsector focuses on decentralized primary care, emergency assistance and preventive measures, while hospitals, outpatient clinics, and diagnostic and therapeutic services mainly are in the hands of private actors (Iaquinto, 2012).

Up to this point, the principal objective regarding primary care has been to provide free, universal comprehensive health care to all citizens. These efforts have almost exclusively been carried out by the public sector that, through programs based on the decentralized approach outlined above, also tried to expand coverage to specialist treatment and hospital care. A central aspect in these efforts has been to support inter-sectorial actions for health promotion and disease prevention. The latter ambition has, on one hand, generated a wide increase and dispersal of so-called “Basic Health Units” (Unidades Básicas de Saúde) across the country. Also, it has generated a new working approach in which primary clinics are reorganized as special family healthcare teams that, by meeting their clients also in their homes and communities, are able to integrate medical care with health promotion and public health actions (Paim et al., 2011). This focus on the ‘family’ as the principal addressee of public policy interventions is a recurrent theme also in other policy areas.

It is secondary care that constitutes the principal interphase between public and private actors. The SUS is, as already noted, highly dependent on contracts with the private sector, particularly in areas such as diagnostic and therapeutic support services. The results so far are mixed. On the one hand, the situation is problematic, in the sense that services in practice often are restricted and preferentially provided to individuals with private health plans.

Similarly, medium complexity procedures are often neglected in favor of high-cost alter- natives. At the same time, there has been a definite and general increase in specialist outpatient procedures in the public subsector over the last 10 years. The Psychiatric Reform Law in 2001, which intended to de-institutionalize and reinforce the rights of individuals with mental illness, led, for example, to a drastic reduction of hospital beds, while the number of community-based psychosocial care centers more than tripled (Paim et al., 2011). Another interesting initiative is the specific Emergency Units, (Unidades de Pronto Atendimento, UPA), that have been set up to serve as a middle-hand between small health care units, such as the previously mentioned “Basic Health Units”, and larger hospitals. By providing individuals the right to medical assistance for up to 24 hours, UPAs have in effect been able to leverage a lot of the pressure on hospitals. Moreover, while occasionally being purposely constructed as cheap and mobile constructions, they are also often easy to re-allocate depending on where the needs are (Agência Brasil, 2012b).

Finally, it is in tertiary care that private actors are increasingly predominant. Two thirds (66.4 percent) of Brazil’s nearly 6400 hospitals are currently under private – i.e. commercial or philanthropic – regime (Tiago, 2012a). Similarly, most high-cost procedures are carried out by either private service providers or public teaching hospitals. The principal challenge here is to coordinate activities between different entities. There is, as of today, no national or regional system of services that can fulfill this function. Instead, coordinated policies are emerging spontaneously in some specialized high-cost areas, such as cardiac surgery, oncology, and organ transplantation. As we shall see later, tertiary care is also the

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industry. In particular the former has played an important role in the development of the Brazilian health system. Increased access to medication has, since its outset, been a central objective of SUS and thus supported by several governmental programs. One central piece in this development is the “Law of Generic Medication” (Lei dos Medicamentos Genéricos 9787/1999) that provides an outspoken support for generic products (Portal Brasil, 2012).

Another important initiative is the unique collaboration with private pharmacies, in which these sell a sample of radically subsidized medicines in a network called “Popular Pharmacies” (Farmacia popular). These, and other, policies have had a tremendous impact on the national pharmaceutical industry that has seen annual growth rates of nearly 10 percent for the last decade (Saúde Web, 2011).

2.3 Results: up to this point

The regular view is that the SUS, despite the lack of financing and other resource problems, has been relatively successful, at least in certain aspects and particular areas.

One indicator is access to health care that has improved substantially after the SUS was launched. The years between 1981 and 2008 saw, for example, a 174 percent increase in health care service use and a corresponding 450 percent increase in the number of people seeking primary health care (Paim et al., 2011). Today, the SUS effectuates 3.2 billion ambulatory procedures annually, 500 million medical consultations per year and more than 1 million admissions per month (Veiga Filho, 2012b). In May 2010, there were 391 emergency care clinics that, along with emergency mobile care services in 1150 municipalities, covered 55 percent of Brazil’s population (Paim et al., 2011). As a result, regional disparities have decreased considerably. Similarly, the access to medication has increased substantially both in terms of geographical distribution as well as in terms of the number of subsidized drugs, that more than doubled from 2008 to 2013 (Goldberg, 2012)

Figure 2 Type of health care facilities in Brazil, 1970–2010. Source: Paim et al 2011, p. 1790.

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Brazil has made astonishing progress in some medical areas, particularly preventive medicine. This is most explicitly illustrated with respect to infant mortality, which has been reduced by nearly 6.3 percent per year since the inception of the SUS. Life expectancy has increased by 10.6 years under the same period. Similarly, mortality from infectious diseases has been reduced from 23 percent of all deaths in 1970 to less than 4 percent in 2007 (Almeida-Filho, 2011). The latter has been achieved through extensive vaccination programs and other preventive measures (Barreto et al., 2011). Brazil has also received international recognition for its policies to control the spread of HIV/AIDS. This has been achieved through massive investments in the production of generic drugs, which also has had far-reaching repercussions in other areas, including a drastic reduction of Tuberculosis.

In recent year, Brazil has also developed the largest public program for organ transplantations, reaching more than 23 000 procedures per year. This represents in itself an increase by more 124 percent in one decade (Veiga Filho, 2012b). As a general observation, Brazil is thus currently on track to meet several of the stipulated UN Millen- nium Goals (Victora et al., 2011).

Figure 3 Infant mortality in Brazil, by Income group, 1990–2006.

Source: Gragnolati et al 2013, p. 86.

Yet, as we shall see in the upcoming sections, many problems still remain, and a retraction in some areas can be noted (Barreto et al., 2011). After all these years, the SUS remains underfinanced and in acute shortage of human and logistic capacity. The fact that less than 50 million people, out of a total population 200 million, have access to the full spectrum of services that comes with a private insurance, implies that the current public-private arrangement need to be revised. Similarly, the SUS suffers from administrative inertia and organizational inefficiencies that seriously hampers the delivery of services. Adding to the

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3 Current challenges and opportunities

As earlier noted Brazilian health policies appear to be at a crossroad, where several con- textual factors may well put health issues at the top of the political agenda in the Presiden- tial election 2014. This makes health care a highly strategic issue, which in turn could be analyzed in terms of challenges and opportunities.

3.1 Decentralization and organizational structure

One of the critical items already during the initial conception of the SUS, was the notion of decentralization as the basis for all policy efforts. This reflected, on the one hand, a general political strive, as Brazil moved away from more than 20 years of authoritarian rule. Yet, it was also perceived an absolute necessity for a country of continental size to have its practical health policies adjusted to local needs. Thus, the challenge, from a practical policy perspective, was to create what was effectively the country’s first integrated national health system by promoting a further decentralization of responsibilities and power.

Figure 4 Population density in Brazil’s big regions.

Source: Paim et al 2011, p. 1779.

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The ambition to balance national comprehensive policies and local autonomy became an almost gargantuan effort. There are, as of today, 5564 municipalities, 26 states and one Federal District for which policies shall be integrated with a maintained level of integrity and independence. The results so far have been mixed. Although overall coverage has improved and regional and social disparities narrowed over the years, there are still major differences between both private and public entities as well as between regions. One can, for example, observe a higher concentration of health care units, including both hospitals and emergency care, in the southern and southeastern part of Brazil, while the north and northeast lag behind the rest of the country.

Similarly, there is a comparatively high concentration of health care units in urban regions, or economic production centers, while the rural areas more commonly have a drastic shortage of similar services. The trends are the same with respect to hospital beds and number of physicians (Scheffer et al., 2011). These differences are in turn reflected in different health indicators. Child mortality rates are twice as high in the north and northeast of Bra- zil compared to the southern or southeastern parts of the country. Furthermore, there are still considerable inequalities between ethnic groups with respect to, for example: maternal and child health, chronic diseases, and violence (Victora et al., 2011).

Figure 5 Physician density per 1,000 population, in Brazil’s big regions.

Source: Scheffer et al 2011, p. 29.

As already noted, there have been several institutional changes in the governance structure.

This includes the creation of health councils and inter-managerial committees at all levels of government in order to create platforms for negotiation and coordination of policies.

Moreover, there is a formally established ongoing discussion, called PlanejaSUS, within the Ministry of Health, regarding the continuous integration and improvement of the SUS.

This process is, however, seriously hampered by the fact that there is no regulatory instrument that defines the proceedings of the planning effort. This, in turn, means that municipal plans, in practice, rarely are integrated in state and federal policies, thereby creating inefficiencies already in the policy formulation process (Vieira, 2009). Similarly, there are

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Finally, adding to the complexity are also the political tensions, and battles over scant resources within, as well as between, all levels of government. The latter is a classic problem in federal systems and one that further impedes the integration of the system as a whole (Paim and Teixeira, 2007).

Consequently, there will be a need to revisit the practical aspects of governance and decentralization in the health sector over the next couple of years. This could be an area of potential collaboration with Sweden that has a strong tradition in health management and discussions regarding multi-professional organizations.

3.2 Management and daily operations

A set of challenges and opportunities are closely linked to the practical daily management of the health services. They include issues like: budgeting and financing; access to human capital and instruments for quality insurance and assessment. The important research development and innovation issues are discussed in chapter 3.3.

3.2.1 Budgeting, financing and organizational issues

A centerpiece of SUS is, as already noted, the division between public and private service delivery. In that sense, questions regarding budgeting and financing constitute the natural starting point for any discussion regarding the management of the system itself.

To get a first overview of the situation, total investments in the Brazilian health sector in 2011 amounted to 9 percent of the country’s GDP. This is slightly less than half of the corresponding investments in the United States (16.5 percent) and less than the average for all OECD countries. What is more striking, though, is that only 45.7 percent of the total budget comes from public coffers (Scheffer et al., 2011). This stands in stark contrast to many other countries, where public – rather than private – investments constitutes the bulk of investments in health care (Guimarães, 2012).

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Figure 6 Health Spending and Physician Density, 2011. Column 1 = health care spending as percentage of GDP, column 2 = annual health spending per capita, column 3 = percentage public spending, column 4 = percentage private spending, column 5 = physicians/habitant.

Source: Scheffer et al 2011, p. 81.

Despite the need for additional funding, the trend is currently going in the opposite direc- tion. The federal health budget increased for several years but was drastically reduced when the government in early 2012 cut the overall budget in response to the global financial crisis. Under these circumstances, the government prioritized investments in infra- structure initiated under its “Program for Accelerated Growth” (Programa de Aceleração do Crescimento, PAC) (2012). The decision to cut the health budget was heavily criticized from all sides and raised question marks concerning the government’s commitments to health care (Passarinho, 2012). The principal point, though, is that federal spending on health largely has been constant in relative terms.

The situation raises several issues that are discussed below.

Distribution of investments within the public sector

As pointed out by various observers, Brazil constitutes in many respect an ‘unbalanced’

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At the same time, the pattern is currently changing. The contribution of states and municipalities increased from 26.05 percent in 2000 to 55.3 percent in 2010, while the federal government’s share went from 59.8 percent to 44.7 percent (Veiga Filho, 2012a). This creates several problems:

1 The situation is complicated by the fact that ultimately even the state and municipal funds essentially are federal money. This means that the federal influence is even higher than what the health budgetary proportions would indicate.

2 The system implies that the federal government has a de facto influence over how, and for what purpose, resources are allocated also at the state and municipal levels, without necessarily having a complete understanding about local conditions and priorities. In practice, and as a means to adjust to their respective realities, states and municipalities often use money designated for health care to pay for other activities, such as school lunches, the cleaning of water – or even to pay off various debts.

3 Finally, states and municipalities differ considerably with respect to size, administrative competence and ability, socio-economic conditions and capacity to raise tax reve- nues within their own jurisdiction. This makes, for example, São Paulo largely an anomaly in the Brazilian context, where half of the country’s municipalities are not able to cover the expenses of the local executive power (Trevisan and Junqueira, 2007).

Figure 7 Share of SUS Financing in Brazil, by Level of Government.

There are currently a number of important amendments to the constitution processed in Congress, intended to alter these premises and also increase financing in the health sector.

One is the so-called Amendment 29 (Emenda 29), which establishes that states and muni- cipalities should allocate 12 and 15 percent of the respective budgets for health service, adjusted for the nominal variation of GDP (Veiga Filho, 2012b). Although already approved and put in vigor, specialists agree that the budgetary increase of around 3 billion SEK (BRL 1 billion) that follows is not enough (Goldberg, 2012). A second amendment, called “Mandatory Budget” (Orçamento Impositivo), is intended to change the dynamic in the budget process. According to the proposal, the federal government would be obliged to

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execute any parliamentary alteration to the budget approved by Congress rather than, as of today, make the authoritative decisions regarding which budgetary alterations to imple- ment. The key here is that under the current regime, the federal government is not bound to follow any specifications but only to abide by mandatory budget restrictions. This means that, in practice, individual projects are regularly incorporated in larger federal programs where they literally disappear. The “Mandatory Budget” proposal, which was initiated in the Deputy Chamber, is implicitly intended to alter this situation and, instead, guarantee the implementation of more locally restricted projects. Importantly, the proposal, which is still being negotiated, also states that 50 percent of the parliamentary alterations in the budget will have to be aimed at interventions in the health care sector (Calmon and Pedroso, 2011). Finally, there is a law proposal currently being negotiated to allocate 25 percent of the royalties from the exploration of the gigantic oil and gas fields (Présal) outside the coast of Rio de Janeiro. This would add an estimated 84 billion SEK (BRL 28 billion) to the health care sector over the next ten years (Peres, 2013).

The relationship between the public and private sectors

Many argue that the relationship between the public and private sectors needs to be refor- mulated for the future (Paim et al., 2011). A centerpiece in this argumentation is that, rather than having created a fruitful interaction between the two sectors, the current system has separated them and created dependencies that make the system as whole more ineffi- cient and costly. As of now, the public health system is, for example, unable to provide all the services and procedures required, which in turn makes it entirely dependent on private hospitals and clinics (Calmon and Pedroso, 2011). Furthermore, there are few efforts to effectively link primary care with other levels of care (Paim et al., 2011).

In practice, many private hospitals offer services also to the public sector and, even though they may complain about the final compensation, private actors are often economically dependent on the public clientele that occasionally constitute up to two thirds of the total.

Adding to the complexity many patients use both the public and the private systems for different services, just as many professionals hold positions in both systems at the same time (Victora et al., 2011). The overall result is a situation in which coordination of and communication between public and private actors are exceedingly difficult, something that inhibits the operation of the system as a whole (Gragnolati et al., 2013).

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Figure 8 Use of Private and Public Providers of Health Care in Brazil, 2012.

As a result, new models for service delivery are currently emerging, most of them based on different types of public-private partnerships (PPP). One actor that is gaining prominence in this development is the ‘social health organizations’ (Organizações Sociais de Saúde).

Philanthropic health institutions have a long tradition in Brazil as a third independent segment in the health sector. The critical point here is that they, to an increasing extent, are being contracted directly by the public sector in what is best described as a ‘non-profit PPP’ (de Oliveira, 2013).

Private health plans and foreign investments

One critical aspect of the relationship between the public and private sectors is the private health insurance plans that finance and, more importantly, provide access to private ser- vices. The plans, in many ways, constitute an interphase between the public and private spheres and are, to a certain extent, indirectly financed by the public sector through different subsidies and tax breaks. The segment encompasses a multitude of actors, such as:

private insurance providers, health care companies, medical cooperatives and individual clinics that in effect may be participating in both the public and spheres ( ck -Reis et al., 2005).

Around 48 million Brazilians are enrolled in some sort of private health insurance, which means that they can seek assistance in either public or private health care units. The remaining 150 million people are limited to public health providers and, thus, mainly primary care. This pattern is however currently changing at a rapid pace. The increasingly affluent Brazilian middle class is prioritizing and buying private health insurances so as to avoid being treated in a crumbling public health care sector.

Only since 2007 has the number of private health insurances grown by 4.7 percent per year, which is putting considerable pressure on the private health care providers (Castro, 2013). These were largely unprepared for the development and are, in some cases, no longer able to keep up with neither demands nor quality standards. The situation has now

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reached the point that the National Agency for Supplementary Health (Agência Nacional de Saúde Suplementar, ANS) in August 2013 suspended 212 commercial health plans from 21 different operators. This action was itself based on more than 17 400 reclamations regarding distinct irregularities (Marchesini, 2013).

One way to overcome the present situation is, some argue, to allow more foreign invest- ments in the Brazilian health sector (Guimarães, 2012). This is a problematic and contro- versial issue. The Brazilian Constitution states that there can be no direct or indirect foreign investments in the areas of “health assistance” including: hospitals, clinical work or treatments. The only areas where foreign capital is allowed to enter are diagnostic medicine and health insurances (Guimarães, 2012).

Despite these restrictions, there is a rapidly growing presence of international actors on the Brazilian health care market. The period between 2011 and 2012 saw, for instance, a 55 percent increase in the number of international mergers and acquisitions inside Brazil.

Interestingly, the larger expansion is taking place in the southern and northeastern part of Brazil that for various reasons are considered particularly attractive markets. One note- worthy event is United Health Group’s purchase of Amil, one of Brazil’s largest health insurance providers, for nearly 32 billion SEK (R$ 9.8 billion) (Capozoli, 2012). Many regarded this investment, which took place in late 2012, as unconstitutional since Amil owns 22 hospitals. The fact that no irregularities were ever found indicates that there might a change in attitude with respect to international investments more generally (Koike, 2012).

From a corporate perspective, Brazil is under all circumstances an interesting and nascent market. As already indicated, around 25 percent of the population currently has a private health insurance. However, the number is rapidly increasing and could be compared with the United States where the corresponding number is 78 percent. This suggests that there might be some room for growth in Brazil. Furthermore, there are nearly 1 600 private health insurers in Brazil, or effectively 3.6 times more than in the U.S., which indicates that there is considerable scope for market consolidation (Gazzoni and Cunha, 2012).

3.2.2 Access to human capital

As noted earlier, there are considerable discrepancies between regions, social strata, as well as between rural and urban areas, regarding access to physicians and other competent medical personnel. This is reflected in various health indicators and statistics. There are various reasons behind this pattern such as:

• the large distances and a general resistance among health professionals to live in re- mote areas (Scheffer et al., 2011),

• budgetary restrictions imposed by the federal government with respect to personnel expenditure,

• poorly designed public sector social security reforms that have incentivized experienced personnel to seek early retirement (Calmon and Pedroso, 2011).

The situation has grown increasingly worse and recently pushed the federal government to launch a special program, “More physicians program” (Programa mais médicos), in order

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Instead, after a combined language and simpler professional examination, they will be eligible to work in both the public and the private sectors (Mendes, 2013).

The demand for competent personnel extends, however, beyond clinical and strictly health- related work. One of the more direct consequences, of the changing market structure in health care, is the need for more staff trained in management and administration. Similarly, the rapid IT-development is bringing in new forms of treatments and administrative rou- tines that will require new skill sets (Nomura, 2012). Clearly, this is an area where Sweden has both technical and administrative competence of potential interest to Brazil.

3.2.3 Instruments for quality assessments

An issue that is gaining increasing attention is the concern for quality, including the development of systems for evaluations and continuous assessment of health care services.

This was for a long time a neglected area in Brazil, particularly with respect to performance indicators (Gragnolati et al., 2013), and mainly the focus of scattered local initia- tives (Paim et al., 2011). It was not until 2011 that the federal government initiated the so- called “Evaluation program for the advancement of the SUS” (Programa de Avaliação para a Qualificação do SUS) intended to take a more comprehensive stance on the issue.

The program is based on several methodologies and is intended to evaluate the performance of the SUS at the municipal, state, regional, and federal levels, in an integrated fashion. It does so by focusing primarily on basic treatment, specialized ambulatory services, hospitals of medium and high complexity, emergency care, as well as pharmaceutical assistance. Also, it pays particular attention to mental and oral health (Calmon and Pedroso, 2011). ne interesting component is the resulting “SUS Performance Index”

(Índice de Desempenho do SUS, IDSUS) that synthesizes and visualizes the resulting data via an interactive website (Portal da Saúde, 2013a). The ambition is that the index, apart from providing transparency, shall constitute the basis for the allocation of resources. This may be another area where there are opportunities for collaboration between Sweden and Brazil.

3.3 Research, development and innovation

A critical component in the management of the SUS is to increase investments in and performance of research, development and innovation. These ambitions reflect not only the needs within the health care sector itself but also constitute a critical component in the overall strategy intended to increase the Brazilian economy’s competitiveness. In this effort, the government’s more recent industrial plan for the period 2011–2014, Brasil Maior, identifies the health sector as a critical area for expansion and growth (Ministério de Desenvolvimento Indústria e Comércio, 2011). The efforts are essentially carried out on two fronts – the academic and the industrial.

On the one hand, there has been a major upsurge in the production of academic articles over the last decade and several Brazilian institutions, such as the Oswaldo Cruz Founda- tion (FIOCRUZ) and University of São Paulo (USP), are stepping up as world-class research entities (Victora et al., 2011). International collaboration in the health area has increased during the last ten years but, largely as a reflection of Brazilian foreign policies, directed at strengthening South–South cooperation and prioritizing South America and Africa (Buss, 2011). A critical item over next decade will therefore be to strengthen Brazil- ian academic institutions by broadening their international academic collaboration with other regions. One important instrument in this effort is the academic exchange program,

“Science Without Borders” (Ciência sem fronteiras), that during four years (2011–2015)

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will provide the economic means for 100 000 Brazilian students and scholars to spend time at foreign universities. To Sweden, which in late 2012 signed an agreement to participate in the program, this provides an interesting opportunity, particularly since health care is one of the prioritized areas of “Science Without Borders”. In this context it will be particularly important to stress the close collaboration between academia, private companies and the public sector that has been critical in the Swedish context.

The principal area of activity, however, is directed towards stimulating innovation and increased competitiveness in the larger health industry complex. These efforts run across the entire sector, ranging from investments in new management tools, largely in the form of information technology that allows for interactive systems and exchange of data, to advancements in the areas of medical equipment and pharmaceuticals (Cezar, 2013). As a result, several ministries and agencies – such as the Ministries of: 1) Health (MS);

2) Science, Technology and Innovation (MCTI); and 3) Industrial Development and Commerce (MDIC) – are involved, with financing coming out from numerous sources depending on the area concerned.

ne critical item in all these efforts is to decrease Brazil’s dependency on external markets. As of today, the Brazilian trade deficit for the health care sector as a whole amounts to nearly 80 billion SEK (USD 12 billion), of which an estimated 20 billion SEK (USD 3 billion) is related to equipment and medical products (Tiago, 2012b). Hence, the current ambition is to increase local production with a longer-term ambition to also conquer the global market.

In order to achieve these objectives, the government has established various funding streams and also imposed requirements on minimal national content in designated products. One critical component is to stimulate an increased collaboration between public and private actors. In line with this, the federal government recently launched, for example, a stimulus package of nearly 25 billion SEK (BRL 8.3 billion) aimed at the health care industry, incentivizing public-private partnerships in the areas of medical equipment and pharmacy. Parts of these funds were explicitly linked to the government’s innovation pro- gram, Inova Empresa, through its subprogram Inova Saúde (Mota and Pedroso, 2013).

On an overall basis, however, the results so far have been mixed and the degree of innovation also varies between sectors. Brazil is, however, at the forefront in areas such as dental implants, mammography, ultrasound and X-ray equipment (Tiago, 2012b). Many of the problems reside in administrative and regulatory procedures. Some import barriers loose, for example, much of their effect by the fact that philanthropic hospitals, which constitute 31 percent of hospital beds and more than 50 percent of all free care, are exempted from import taxes (Azevedo, 2012). Similarly, the credit lines established by agencies such as the Brazilian Development Bank (BNDES) are often limited to products fabricated in Brazil, something that complicates foreign investments (Tiago, 2012b).

Finally, arduous and time-consuming administrative processes often delay the clearance of different permissions and approvals. For any international pharmaceutical company it is, for example, more efficient to seek permission via the U.S. Food and Drugs Administra- tion (FDA) than via its Brazilian counterpart Agência Nacional de Vigilância Sanitária (Anvisa). This has, in turn, created a situation where large international companies – such

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The pharmaceutical industry is a good illustration of the challenges and opportunities that the Brazilian health care sector confronts. It is currently one of the cornerstones of the Brazilian health industry complex and has grown at almost 10 percent per year over the last decade despite the economic recession (Garrido, 2012b). This growth can largely be ascribed to a set of active public policies and is, in a sense, an expression of the historical foundations of the SUS, where access to medication already from the outset was a prioritized issue. Particularly important measures where in this case:

1 the active support of generics,

2 the creation of extensive distribution networks, mainly through the already mentioned Programa Farmácia Popular,

3 financial credits through the Brazilian Development Bank (BNDES),

4 organized public procurement, reaching 45 billion SEK (BRL 15 billion) per year, on part of the Ministry of Health (Goldberg, 2013b),

5 macroeconomic policies that maintained low unemployment rates and significantly increased the middle class, thereby generating larger purchasing power among cus- tomers (Garrido, 2012b).

A critical point here is that the growth up to this point has been almost exclusively related to the generic segment that increased by 513 percent between 2005 and 2011, when total sales went from 4.6 billion SEK (BRL 1.52 billion) to more than 23 billion SEK (BRL 7.8 billion), thereby making up for nearly 26 percent of all pharmaceutics sales (Garrido, 2012a). This could in turn be compared to the total annual research investments in the sector that currently amounts to a mere 970 million SEK (USD 150 million).

This suggests that there may be room for expansion and, as already noted, pharmaceuticals is one of the prioritized areas in the recent Brazilian national industrial policy plan (Garrido, 2012b). One area of particular interest is biopharmaceuticals where Brazil has enormous potential due to the country’s biodiversity. A number of steps have recently been taken to further explore the field and one important measure is the current efforts to alter the Brazilian legislation regarding biodiversity. The current legislation takes a strong stance on international presence and bio-piracy² (Dourado, 2013). Moreover, the area is one of five selected fields in the previously mentioned funding program Inova Saúde (Soares, 2013).

This focus on innovation and intended expansion of the Brazilian health industry complex provides, clearly, commercial opportunities for Sweden. It should be stressed, though, that any decision to move forward requires a continuous assessment of regulatory and administrative conditions in each commercial area.

3.4 Medical conditions and developments

A third category of challenges and opportunities relate to medical condition and developments. As already noted, Brazil has made considerable advances in some medical areas such as preventive medicine, generating significant reduction in infant mortality and a corresponding increase in life expectancy. The Brazilian vaccination programs for infec-

2 The commercial development of naturally occurring biological materials, such as plant substances or genetic cell lines, by a technologically advanced country or organization without fair compensation to the peoples or nations in whose territory the materials were originally discovered. Source: The Free Dictionary.

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tious diseases have met international recognition, just as their policies to control the spreading of HIV/AIDS.

Yet, many problems remain and one can also note a certain retraction in some areas, such as health-care acquired infections and dengue fever (Barreto et al., 2011). One of the principal challenges today is the rapidly aging population that, in combination with growing urbanization rates, already is raising new demands on the health sector (Paim et al., 2011). Another problem is the rapidly increasing portion of people that are overweight (48.5 percent) or obese (15.8 percent) (Agência Brasil, 2012a). Also, in a short period of time chronic and non-communicable diseases, such as high blood pressure, diabetes and different neuro-psychiatric ailments, have emerged as the most common causes of death (72 percent) (Schmidt et al., 2011). Adding to this are problems that follow from extensive alcohol abuse, such as violence and accidents (Reichenheim et al., 2011). These developments are putting additional pressure on the policy-related challenges outlined above.

3.4.1 The rapidly ageing population

One area that illustrates some persistent but also novel challenges is the treatment of elderly. This is, no doubt, one of the more important issues for the future both in terms of health care, strictly speaking, but also from a macroeconomic perspective. Mainly due to economic expansion, along with successful preventive health policies, the number of elderly in Brazil has increased by 700 percent in less than 50 years.³ Presently, even the most conservative projections indicate that Brazil in 2020 will have more than 30 million people in the upper age bracket (Veras, 2009). The situation is further complicated by an almost 60 percent decline in fertility rates between 1970 and 2000 (Wong and Carvalho, 2006). With current birth rates at 1.86 children per woman (2008), it is far from clear how the current system will be sustainable in the future (Paim et al., 2011).

The direct consequences of the ageing demography on the health care sector is mixed.

Programs such as Bolsa Familia provides economic support to families and individuals in lower socio-economic strata. These new economic opportunities have increased the number of elderly seeking medical assistance but at the same time decreased the need for hospital care. Importantly, it has also altered the role of the elderly individual within the family, from being a ‘dependent’ to someone that actually contributes to family income (Neril and Soares, 2007). On the other hand, the growing number of elderly has also had a major impact on daily operations in the health care sector, by introducing more complex diseases, requiring costly treatments and procedures (Veras and Parahyba, 2007).

Another important program is the “Program for elderly home care” (Programa de atendi- mento domiciliar de idoso) that builds on previous decentralized efforts in the home environment. This policy, which also involves a component of continuous assessment of the patient’s health status (caderneta), has been largely successful, both in medical and economic terms (Floriani and Schramm, 2004). Yet, it has also raised a number of new challenges with direct implications for, among other things, the capacitation of involved personnel. Many patients are reluctant to being treated in their home environment, since they believe that they are thereby denied proper health care that, in their view, only can be provided at hospitals or other health care units. Similarly, many physicians are not being

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as doctors, do not rule. For that and other reasons, such as cost efficiency and a pressing work agenda, many physicians will effectively maintain patients in established health care units (Floriani and Schramm, 2004). This illustrates the need for continuous social innovation in the form of: 1) increased and alternative forms of information between actors; and 2) new skill-sets and additional training of health professionals to meet new relationships (Lourenço et al., 2005).

3.4.2 The treatment of children

The scenario of a rapidly ageing Brazilian population outlined above emphasizes the im- portance to invest in the conditions for children. Only through decent health care and proper education will the next generation be able to sustain the current system and guarantee decent livelihood for a growing number of elderly (Wong and Carvalho, 2006).

The role of children in Brazilian health policies is somewhat mixed. On the one hand, there have been considerable clinical advancements regarding, for example, the reduction of child mortality (Ministério da Saúde, 2010). At the same time, however, children’s social context, involving issues such as child labor, has more often been neglected, or simply not regarded as a health matter. Yet, this picture is currently changing and we see the emer- gence of a more integrated view also regarding children’s health. The result is a new type of policy integration also at the political level, where for example children’s school attend- ances is a prerequisite for economic support to low-income families.

These integrated policy programs target several aspects of health care for children and adolescents. The “Children’s Health Booklet” (Caderneta de Saúde da Criança), for ex- ample, contains a set of guidelines regarding the growth and development of children between 0 and 9 years of age, directed to caregivers and health professionals. The first section, intended for parents and caretakers, provides specific advice on how to ensure the child’s health but, interestingly, also a part regarding the rights of both child and parents (Ministério da Saúde, 2013). This focus on legal rights is, among other things, called upon by the fact that accidents and violence in recent years emerged as the primary cause of death for children and adolescents between 1 to 19 years of age (Ministério da Saúde, 2010). Even more worrisome, the pattern is deeply rooted in society. The fact that 75 percent of all children and adolescents are exposed to violence by their own parents as part domestic education, illustrates how the question of juvenile health is highly related to socio-economic and cultural factors. One important initiative to remedy the latter situation is the network “Don’t Beat, Educate” (Não Bata Eduque), whose mission is to put an end to physical punishment within the family, school, and wider community. The network, which has had considerable support by “Save the children” (Rädda Barnen) as well as Swedish actors, was instrumental in pushing a new Law Proposal (7672/2010) with the same popular name, “Não Bata Eduque”, that would criminalize the maltreatment of chil- dren (Rede Não Bata Eduque, 2013).

Yet, the implementation of similar policies is fraught with the same problems as policies for elderly. The “Statute of Children and Adolescents” (Estatuto da Criança e do Adoles- cente) specifies, for example, the obligation to notify any suspected or confirmed case of abuse. However, in practice this is easier said than done and all too often maltreatments are not reported. The phenomenon is particularly challenging in the health sector, where any reporting could be interpreted as a breach of either professional confidentiality or confi- dence. Moreover, structural conditions such as the lack of infrastructure and competent

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personnel in the designated Guardianship Councils (Conselhos Tutelares) may also further impede the process (Gonçalves and Ferreira, 2002).

3.5 Final words

“The giant has awoken”, this was the slogan guiding the protests as they peaked in June 2013. A study made shortly afterwards showed that more than 77 percent of the inter- viewed identified health care as the principal problem in Brazil (Costa, 2013). Since then the government has also increased its activities and investments in the area. Only a few days after the crisis, President Dilma announced a new “Health Pact” (Pacto da Saúde), involving a designated 45 billion SEK (BRL 15 billion) to be spent during 2014, mainly on investments in infrastructure (Goldberg, 2013c). The money will be needed. Other studies indicate that Brazilians also are comparatively more dissatisfied with their health system than citizens in other middle-income countries, such as Malaysia and Uruguay (Gragnolati et al., 2013).

The above suggests that health may be one of the central issues in the Presidential elections 2014 and, consequently, gain considerable attention in the months to come. Also, there is every reason to believe that the focus on health care will remain after the elections. The needs and challenges are certainly there as well as many hitherto unexplored opportunities.

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4 Implications for Sweden

The characteristics of the Brazilian health system outlined above raise interesting possibilities also for Sweden. More broadly, we discern at least four areas for potential collaborations between business, academia and policy:

• One concerns the practical aspects of governance and decentralization in the health sector. This is an area where Sweden has a strong tradition and where one could stimulate both academic and professional exchanges, also at the policy level.

• A second issue concerns the development of quality measures along with systems for evaluation and continuous assessment of health care services, as well as the effi- ciency of particular policy instruments.

• Thirdly, the program “Science Without Borders” provides a unique opportunity to promote increased research collaboration, stressing the close collaboration between academia, private companies and the public sector particular to the Swedish context.

• Finally, the current focus on innovation and the intended expansion of the Brazilian health industry complex provides commercial opportunities for Sweden. It should be stressed, though, that this requires a continuous assessment of regulatory and administrative conditions in each commercial area.

The Brazilian Health Care System