DETERMINANTS OF BUSINESS COMBINATIONS IN
SUPPLEMENTAL HEALTHCARE: AN ANALYSIS OF MARKET CONCENTRATION AND
PROFITABILITY
Name: WANDER CHAGAS CARNETTI
Publication date: 29/07/2024
Examining board:
Name |
Role |
|---|---|
| AZIZ XAVIER BEIRUTH | Examinador Externo |
| DONIZETE REINA | Examinador Interno |
| RODRIGO SIMONASSI SCALZER | Presidente |
Summary: This research analyzes whether market concentration and profitability are determining
factors for the likelihood of business combinations in the Brazilian supplementary
healthcare sector. The supplementary healthcare segment, in addition to being an
essential segment for the population, is highly concentrated due to its economies of scale,
and has a large number of mergers and acquisitions, and is increasingly growing. The
research used data from Self-Management, Medical Cooperatives, Philanthropy, Group
Medicine and Specialized Health Insurance Companies that were registered in April 2024
with the ANS – National Health Agency and that had active beneficiaries until December
2022, in addition to the supplementary healthcare market concentration analysis
processes submitted to CADE – Administrative Council for Economic Defense. Data were
extracted from 707 companies and 232 processes submitted for approval by CADE in the
period between 2011 and 2022, totaling 6,618 observations used in a logit model to
estimate the probability of business combinations occurring. Among the characteristics of
the companies studied, it was possible to confirm the study hypotheses through
performance using the ROIC proxy for return and the Herfindall index for market
concentration, in relation to total beneficiaries. The results demonstrated that profitability
and market concentration, in relation to total beneficiaries, can be considered as
determining factors for the occurrence of business operations, either to the detriment of
inefficient companies being subject to merger and/or acquisition by companies that are
operating with positive returns and in a state of solvency or because companies with
higher concentration indices seek, through business combinations, to reduce production
costs and increase goods and services through economies of scale. These results, in
addition to contributing to the understanding of a market with strong movement in mergers
and acquisitions, help to better understand the factors that make companies potential
targets for this type of operation.
