Foreign investment in healthcare

A couple of months ago, Federal Law No. 13,097, of January 19th, 2015, brought some news to the healthcare business by modifying article 23 of Federal Law No. 8.080, of September 19th, 1990. Foreign investment in this sector was made possible in a wider fashion, in accordance to the constraints of article 199, §3, of the Constitution. Now foreigners may even hold controlling interests in hospitals and medical laboratories. Prior to this legislation, foreign investment was basically limited to international donations from the United Nations and to services provided by foreign companies to their own employees on a non-profit basis. The health insurance industry was an exception, as it had already been open for foreign investors more than a decade ago(article 1, §3, of Federal Law No. 9.656, of June 3rd, 1998).

The new rule amplifies the complexity of an already multifaceted market. The federation’s three levels of government (federal, state and municipal) are supposed to undertake universal healthcare for the population in a collaborative scheme set out by the Constitution and by Federal Law No. 8.080. Under certain conditions, the private sector – notably, philanthropic entities – may adhere to this program by means of contracts and agreements with government agencies. Brazilian courts end up playing a major role in the system, as individuals frequently sue the government so as to obtain medication and medical treatments that are not available in state-run facilities. Public-interest civil suits aimed at forcing local or regional policies in given fields of healthcare are common as well.

On a note of how compliance practices are spreading in Brazil, the National Association of Private Hospitals has just issued a corporate Code of Conduct (available, in Portuguese, here).