Painel Abramed - O DNA do Diagnóstico - inglês

Graph 11 Brazil – Health expenditure as a proportion of GDP – Total, public and private (2000-2018) 100 Sources: WHO – World Health Organization: 2000-2009. IBGE. Health satellite account: Brazil: 2010/2017. Designed by Abramed. Note: 2018 Abramed’s estimation. 9.1 9.3 9.24 9.1 8.3 8.5 8.7 8.4 8.7 8.0 8.2 8.1 8.0 8.3 8.2 8.0 7.8 7.9 8.2 Health expenditure relative to GDP (%) 3.5 3.5 3.7 3.5 3.5 3.3 3.6 3.5 3.5 3.7 3.6 3.5 3.4 3.6 3.7 3.9 4.0 3.85 3.9 4.8 5.0 5.0 4.7 4.6 4.7 4.7 4.7 4.5 4.7 4.4 4.3 4.5 4.6 4.9 5.2 5.3 5.39 5.2 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Families and non profit institutions serving families Government Total Analyzing the expenditure by type of prod- mainly the payments made to the healthcare uct, the private health services represent 66.8% and insurance operators. Right next to it we of the total and correspond to the biggest por- have the proportion of expenditure with med- tion of expenditures in health by families: R$ ication: 29.9%, totalizing R$ 111.3 billion in the 248.5 billion in 2017. This number contains same period. Abramed Panel | 2020

Table 12 Total health expenditure in Brazil by institutional sector, according to products used (R$ values adjusted) (2010-2017) Source: Health satellite account: Brazil: 2010-2017. Designed by Abramed. 101 Note: Values deflated by the average of the IPCA index for the period of 12 months of each year. Base year 2020. Final expenditure, by institutional sector, 2010 2011 2012 2013 2014 2015 2016 2017 based on individual products (million R$) (A+B+C) Total 276,930 289,749 314,667 336,537 367,793 371,419 363,202 371,741 Drugs for human use 103,906 103,707 108,301 110,814 116,730 111,911 111,159 111,265 Families (A) Pharmaceutical preparations 199 204 214 224 227 210 219 222 Medical and dental devices and 529 581 652 689 752 794 754 819 instruments 8,546 8,642 8,936 9,940 10,908 11,214 10,541 10,969 Other materials for medical, dental and optical use, including prosthetics Private Health 163,750 176,615 196,564 214,870 239,176 247,290 240,528 248,466 Government (B) Total 233,872 239,591 245,808 265,604 284,157 279,963 276,424 272,814 Drugs for human use 11,788 11,455 10,909 11,876 12,426 13,166 11,325 9,079 Public Health 176,792 184,196 188,688 209,052 224,873 222,913 219,051 216,815 Supplementary Health Market in Brazil Private Health 45,291 43,940 46,211 44,675 46,857 43,885 46,048 46,921 Non-profit Total 7,200 7,146 6,873 8,411 9,463 9,173 9,112 9,556 institutions Private Health 7,200 7,146 6,873 8,411 9,463 9,173 9,112 9,556 serving families (C) The increase of the total health expen- R$ 1,408.66 to R$ 1,319.23 (-6.3%) and the ditures as a proportion of the GDP be- families’ expenditures decreased from R$ tween 2014 and 2017 is essentially due to 1,870.26 to R$ 1,843.79 (-1.4%). This period the decrease of the GDP, considering the was marked by the biggest economic cri- real health expenditure per capita, de- sis Brazil’s history, directly reflecting on the flated22. In this period, the real per capita government’s ability to finance the health expenditure by the government went from services to the population. 22. Values deflated by the average of the IPCA index for the period of 12 months.

102 Table 13 Per capita expenditure in Brazil Regarding the share on health ex- by institutional sectors penditure between the public and private sectors, in spite of the cons- (R$ values adjusted by base year 2017) titutional existence of a public health system accessible to everyone, the Source: Health satellite account: Brazil: 2010/2017. Designed by Abramed. country shows a proportion of private Note: Values deflated by the average of the IPCA index for the period of 12 months of expenditure bigger than the public each year. Base year 2019. expenditure. According to the Orga- nization for Economic Cooperation Period Government Families Total and Development (OECD) data, even with health expenditures in the same 2010 1,200.08 1,457.87 2,657.94 proportion of GDP as the developed countries, as mentioned before, the 2011 1,218.64 1,510.15 2,728.78 share of public expenditure is much lower when compared to countries 2012 1,239.42 1,621.43 2,860.84 such as the United Kingdom (77.1%) and Spain (70.5%). In this way, the 2013 1,328.00 1,724.71 3,052.71 proportion of the public expenditure in Brazil has been decreasing every 2014 1,408.66 1,870.26 3,278.92 year and maintaining the downwards trend from 2010 to 2017. 2015 1,375.94 1,870.44 3,246.38 2016 1,347.35 1,814.78 3,162.13 2017 1,319.23 1,843.79 3,163.02 Graph 12 Brazil – Government and families share on the expenditure with final consumption of health goods and services (2000-2018) Abramed Panel | 2020 Family / Government ratio (%)Source: WHO – World Health Organization: 2000-2009. IBGE. Health satellite account: Brazil: 2010/2017. Designed by Abramed. Estimate Note: 2018 estimate Abramed. 57.6 60 42.4 58 56 54 52 50 48 46 44 42 40 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Families and non profit institutions serving families Government

In the OECD selected countries, 103 it is possible to observe that the go- Government share on vernment share on health expendi- health expenditure is ture is, in average, of 73.8%. In the bigger on the developed European countries, the govern- countries. ments pay for 60% to 70% of these expenditures. Such reality shows that the developed and high-income per capita countries have a signifi- cant share on the public expenditure over the total health expenditure. On the other side, developing coun- tries such as Brazil and South Africa show a smaller share on the public expenditure, getting to 43.0% and 42.9% respectively. Graph 13 Government share (%) on the expenditure with final consumption of health goods and services (2018 or more recent year) Source: Organization for Economic Cooperation and Development – OECD. Designed by Abramed. Government share on health expenditure (%) Supplementary Health Market in Brazil 84.5 84.5 84.1 83.4 77.1 73.8 70.5 69.7 69.3 66.5 63.7 60.3 57.1 51.5 43.0 42.9 United States Germany Japan France U.K. OCDE Average Spain Canada Australia Portugal Switzerland Greece Russia Mexico Brazil South Africa

104 The share of the pub- population’s health needs lic sector in financing the and minimize the need for fi- health expenditure has con- nancing from other sources. tributed to the growth pace The evolution of the health of the health expenditure expenditure in comparison to above the per capita GDP the economic performance and GDP variation, especially can be evaluated by compar- in some middle and high-in- ing growth rates in the health come countries. However, expenditure per capita and even in these countries, these the GDP per capita growth. expenditures are becoming There is a much more faster a significant challenge to the increase in the health expen- economic sustainability. This diture per capita compared to fact is a result from the effi- the variation in the GDP per cient allocation to meet the capita as follows. Graph 14 GDP and health expenditure per capita (US$ PPP23) – Cumulative variation in selected countries (2000-2017) Fontes: WHO – World Health Organization. World Bank | World Development Indicators database. Designed by Abramed. 124.7% United States 19.4% 40.0% Abramed Panel | 2020 U.K. 20.6% 99.2% 135.8% 176.2% Cumulative fluctuation between 2000 and 2017 Spain 37.3% 103.8% 139.1% 180.0% Japan France 13.6% 96,0% 140.0% Canada 33.5% Brazil 14.9% 15.8% 80.0% 100.0% 120.0% 160.0% 12.2% 25.2% 30.0% 57.7% 25.2% 53.4% 0.0% 20.0% 40.0% 60.0% Per Capita Health Expenditure GDP per capita GDP 23. PPP Purchasing Power Parities in US$.

105 The health expenditure have Graph 15 Health expenditure as a considerably increased between proportion of GDP (1970-2018) the 70s and the most recent pe- riod. Maintaining the growth Source: OECD Health Statistics 2019. Designed by Abramed. 16.9 United States pace in the health expenditure is an important challenge, espe- 18.0 cially in the government share on financing health services. 16.0 This increase may indirectly in- fluence the health conditions of Health expenditure – GDP Share (%)14.0 the population, increasing the availability of financial resources Supplementary Health Market in Brazil for families and companies to be 12.0 11.2 Germany allocated to health determinants, 11.2 France such as education and food. In this way, the positive relationship 10.0 10.9 Japan between the health expenditure 10.7 Canada and the GDP suggests that the improvement on the economic 8.0 9.1 Brazil development level can contrib- 9.2 Portugal ute to the financing of health in 8.9 Spain the poorer countries and in the developing countries. 6.0 8.1 South Africa 4.0 2.0 1970 1980 1990 2000 2010 2018

106 The world’s health expenditure to- biggest health expenditure as a pro- taled US$ 7.8 trillion in 2017, repre- portion of the GDP, with a share of senting approximately 8% to 10% of 16.9% in 2018. In the European Union the world’s GDP and nearly US$ 1,080 countries, the expenditures corre- per capita. The estimates indicate that spond, in average, to 9.9% of the the health expenditure reach US$ GDP, with a significant participation 10.6 trillion in 2030 and US$ 15 trillion of the public sector in the financing in 205024. The United States show the of the health expenditure. Graph 16 Health expenditure as a proportion of GDP (2018) Source: OECD Health Statistics 2019. Designed by Abramed. Note: Classified by decreasing order, according to the percentage of public expenditure. United States 14.3 2.6 16.9 Germany 9.5 1.7 11.2 15.0 France 9.3 1.9 11.2 Japan 9.2 1.7 10.9 Switzerland 7.8 4.4 12.2 U. K. 7.5 2.2 9.8 Canada 7.5 3.3 10.7 Italy 6.5 2.3 8.8 OCDE Average 6.5 2.3 8.8 Australia 6.4 2.8 9.3 Spain 6.2 2.6 8.9 Portugal 6.0 3.1 9.1 Chile 5.2 3.7 8.9 Israel 4.8 2.7 7.5 Brazil 4.0 5.2 9.2 Abramed Panel | 2020 South Africa 3.5 4.6 8.1 Russia 3.0 2.3 5.3 Mexico 2.8 2.6 5.5 India 0.9 2.7 3.6 0.0 5.0 10.0 20.0 Public Families and companies 24. Past, present, and future of global health financing: a review of development assistance, government, out-of-pocket, and other private spending on health for 195 countries, 1995–2050

The health expenditure per cap- health system that is equivalent to 107 ita in Brazil has surpassed US$ 751.0 SUS. In the United Kingdom, the NHS in 2000 to US$ 1,472.2 in 2017, with has showed an cumulative increase a cumulative variation of 96% in the of 176.2%, while other developed period. According to WHO data, this countries such as Japan (139.1%) and is the lowest variation amongst the Spain (135.8%) had smaller growths, selected countries from 2000 to but still significant when compared 2017. On the other end, there is the to Brazil. Graph 17 Health expenditure per capita (US$ PPP) – Cumulative variation in selected countries (2000-2017) Cumulative fluctuation – Per capita health expenditure (PPP US$)Source: WHO – World Health Organization. Designed by Abramed. 176.2 U. K. 139.1 Japan 180% 135.8 Spain 160% 124.7 United States 140% 103.8 Canada 120% 99.2 France 100% 96.0 Brazil 80% 60% 40% 20% 0% 2000 Supplementary Health Market in Brazil 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

108 In general, studies show a notable Health spending positive association between the life ex- per capita can pectancy and the level of health expen- influence the increase diture per capita. The health systems with in life expectancy of higher per capita expenditure, especially the population. in the public sector, contribute to the in- crease the longevity by offering accessi- ble and better quality medical services. In these countries, it is possible to ob- serve lower mortality rates considering the main risk factors. Naturally, other so- cioeconomic factors, such as education, eating habits and the level of income have an influence on the health and pro- ductive capacity of the population. Graph 18 Health expenditure per capita (US$ PPP 2017) and life expectancy (2016) – Selected countries Source: WHO – World Health Organization. Designed by Abramed. 10,246 12,000 10,000 Abramed Panel | 2020 8,000 Health expenditure per capita (US$ PPP) 6,000 4,564 4,000 2,000 1,036 1,098 1,472 60.0 65.0 70.0 75.0 80.0 85.0 90.0 Life expectancy at birth (years)

The care expenditures25 of the From the perspective of the di- 109 healthcare plans have totaled to R$ agnostic exams (clinical analysis and 172.8 billion in 2019, with an increase imaging exams), the healthcare ex- of 8.1% in comparison to the year penditure totaled R$ 36.0 billion and before. This result comprehends the increased, in comparison to 2018, 7.2% values published by ANS at Tab- in 2019, with a share of 20.8% over the Net, excluding dental information, total. Considering the period between while the expenditure with comple- 2015 and 2019, the growth pace of the mentary exams considers the val- expenditure in exams has been of 7.4% ues published on the Care Map. The per year, while the care expenditure care expenditure on the dental seg- on the sector increased 7.8% per year, ment totaled R$ 1.8 billion and rep- highlighting the variation of the expen- resented nearly 1.0% of the sector’s diture with hospitalizations at 9.1% and expenditure. therapies with 16.3% per year. Graph 19 Healthcare and diagnostic exams expenditure in the Supplementary Health (2015-2019) – in billions R$ Sources: ANS – Care Map of the Supplementary Health 2019 and TabNet (DIOPS/ANS/MS). Accessed in Aug. 18/2020. Designed by Abramed. Totalwelfare 135.6 149.1 159.8 172.8 Supplementary Health Market in Brazil 118.8expenditure 28.2 30.1 33.6 36.0 (except 20.8% 20.2% 21.0% 20.8% odontology) 107.4 119.0 126.2 136.8 25.2 21.2% 93.6 2015 2016 2017 2018 2019 Supplementary examination expenditures Assistential expenditures (consultations, therapies, hospitalizations, others) 25. It is the total expenditure, expressed in Brazilian Reais, with the events performed (by federative unit) by the beneficiaries with contract with operators and out of the grace period in the defined care items, deducting the disallowance values. Note: Total health care expenditure considers only medical-hospital operators according to TabNet. Considering the DIOPS, the assistance expendi- ture was of R$ 174.5 billion in the supplementary health sector.

110 The expenditure with hospitalizations represent the bigger portion of care expenditures in the supplementary health sector. Graph 20 Distribution of the healthcare expenditure in Supplementary Health – excluding dental (2019) Source: ANS – Care Map of the Supplementary Health 2019. Designed by Abramed. 14.9% 4.6% Abramed Panel | 2020 Medical Appointments 8.5% Other outpatient services 20.8% Tests 46.5%Therapies Hospitalizations Other medical-hospital expenditures 8.4%

Regarding the proportion of expenditure, just ing the variation in the cost of care items, it is 111 like in previous periods, the expenditure with possible to observe that all items have showed hospitalizations represent the bigger portion of a reduction in the growth pace. Regarding doc- care expenditures in the supplementary health tor’s appointments, we can observe a variation sector. They are equivalent to 46.5% of the total of 6.9%, in exams 8.6%, in hospitalizations 12.5% and added up to R$ 80.4% billion in 2019, with and therapies 27.5% in the last twelve months an increase of 17.9% In general, the procedures that finished in September 2019 in comparison performed at the hospital environment are more to the twelve months immediately before that. expensive and, for that reason, they have a sig- On the same period, the average IPCA was of nificant share in the composition of the care ex- 3.8%27. It is important to highlight that the IPCA penditure in supplementary health. should not be compared to the variation of aver- age medical expenditures and it is only used as a According to data form the Institute of Stud- parameter to show the pace of the variation for ies of Supplementary Health (IESS)26, regard- this group of care items. Graph 21 Variation of the medical-hospital cost by item of healthcare expenditure (cumulative rate in twelve months – Jan.2016/Sep.2019) Source: Variations of Medical-Hospital costs – VCMH/IESS. Designed by Abramed. Note: Variation in twelve months finished in September 2019 in relation with the twelve months finished in September 2018. 35 Cumulative fluctuation (%) over 12 months 30 Supplementary Health Market in Brazil 27.5 25 20 15 12.5 10 8.6 6.9 5 Appointments Tests Hospitalizations Therapy Jan.16 Mar.16 May.16 Jul.16 Sep.16 Nov.16 Jan.17 Mar.17 May.17 Jul.17 Sep.17 Jan.18 Nov.17 Mar.18 May.18 Jul.18 Sep.18 Nov.18 Jan.19 May.19 Mar.19 Jul.19 Sep.19 26. The Variation of the Medical-Hospital Cost – VCMH/IESS – takes into consideration a group of 870.2 thousand beneficiaries on individual plans. The calculation in made to a group of individual plans (old and new) from national range operators. 27. It considers the variation in the index number on the last twelve months, finished in September 2019 in comparison with the twelve months immedi- ately before.

112 The future of health financing – the role of diagnostic medicine Abramed Panel | 2020 I t is very important to look at the tween the agents involved – operators past and anticipate the future and health insurers, employees, service trends in health financing to be providers, suppliers, distributors, gov- able to plan and correctly allo- ernment and families – will be altered, cate the necessary resources to reach a aiming to preserve the sustainability of minimum standard for the population’s the health system and to ensure the ac- healthcare. There are studies28 that seek cess to the population, especially the to follow and project the levels of health ones with lower income and exclusively expenditure considering both the public dependent on the public sector. and private financing sources. The governments must play a special The trajectory of the health expen- role in the financing of the health expen- diture depends on a group of factors diture and they usually are the biggest associated to the socioeconomic devel- source of resources for health in most opment, macroeconomic, demographic, developed countries, as we have already epidemiological and political conditions said before. The OECD countries have of each country. The pressure over the been using a common public policies budgets of the public sector, for families approach by combining strategies aim- and companies, will demand a constant ing to reduce the costs associated with transformation in the management and the structural changes for medium and correct allocation of finite resources in long terms, improving the cost-benefit the health area. The relationships be- ratio of health services. In many coun- 28. Global Burden of Disease Health Financing Collaborator Network.

113 tries, it is possible to observe changes in countries of medium-high income and Supplementary Health Market in Brazil the healthcare financing through a more OECD countries, as shown before. active involvement of the patients. Is this cases, it is mandatory that the patients The estimate is that the health expen- pay part of the healthcare expenditures diture per capita increase every year, but through a co-participation system. at a moderate growth pace, and that the differences between the composition In the private sector, the plans of in- of public and private expenditures shall surance coverage tend to stimulate the remain in the next decade29. The study demand for health services, because highlights that the prioritization of health the beneficiaries usually do not actively by the State is a key factor in changing participate on the payment of the ex- the ratio of total expenditures and grad- penditures arising from the healthcare ually replace the share of direct health- service provided (adverse selection and care expenditures. The combined effects moral hazard). In this sector, the number of the health financing policies and the of beneficiaries of healthcare plans and economic growth tend to increase the insurances depends essentially on the equity and promote a more wide health formal labor market. The coverage rates coverage and with better results. are driven by the labor market condi- tions and by the set of benefits offered The medical literature shows that by the employer. The employers seeks early detection actions are key to en- to balance the need of having employ- sure simpler and more cost-effective ees and the need of restraining costs. treatmtents, and also to increase the Therefore, the formal job offer may not probability of curing a patient. This be enough to guarantee access to the way, the diagnosis process has relevant private healthcare and insurance plans. implications not only on the in the pa- tient care cycle, but also in the direct On the other hand, in the public sec- costs to the health system and indirect tor, the increase in the budget for health ones arising from patient’s disabilities. did not follow the growth of the Uni- The value of the diagnostic medicine in fied Health System (SUS), putting Brazil the treatment of patients is preponder- as one of the countries with the lowest ant for sustainability and financing the ratio of public expenditures in compar- health market, avoiding waste and in- ison with the whole Latin America, the crease health spending. 29. Past, present, and future of global health financing: a review of development assistance, government, out-of-pocket, and other pri- vate spending on health for 195 countries, 1995–2050.

The sector of diagnostic medicine



The sector of diagnostic medicine

The diagnostic 117 medicine sector fulfills its role in the patient’s care cycle T he services from the diag- The sector of diagnostic medicine nostic medicine can be de- fined through a group of medical specialties in dif- ferent areas that includes laboratory medicine, clinical pathological, nuclear medicine, medical genetics, radiology and imaging diagnosis, able to guide the indication, performance and inter- pretation of complementary necessary exams for the prevention, diagno- sis, treatment, prognosis and moni- toring of pathologies. This is a sector that innovates and evolves constantly through processes and Technolo- gies able to perform diagnostic exams with quality and accuracy converg- ing with the epidemiological scene of the country. Consequently, the sector constantly invests in research and de- velopment, molecular diagnostic solu- tions, digital transformation, processes automation, integration of the elec- tronic medical records, among others, always aiming to offer services with a high level of quality and contribute to a better healthcare.

118 The diagnostic medicine sector suitable and necessary to process has handled nearly R$ 45 billion in exams in a more efficient way, in less 2019 and stands out in the Brazilian time and with lower costs. This sec- private health market, considering tor, as in many economic segments many socioeconomic, demographic that are labor-intensive, the econ- and epidemiological factors that omies of scale are extremely rele- promote the growth and develop- vant to maintain the sustainability ment of the health sector. However, of the laboratory and imaging activ- the diagnostic medicine face con- ities. For that reason, a natural pro- stant structural and technical chal- cess of consolidation takes place lenges, driven by regulatory and through the acquisition of small re- fiscal requirements, and by the in- gional brands and companies with corporation of new technologies family structures. Abramed Panel | 2020

Health 119 facilities According to According to data from the Ministry The sector of diagnostic medicine CNES, in June of Health National Registry of Health Fa- 2020, there cilities (CNES/MS), by the end of June were 24,760 2020, there were 24,760 units of su- SADT units. pport service for diagnosis and therapy (SADT) in Brazil. This number takes into account the units that operate inside hospitals, clinics and other health facili- ties. The following table shows the num- ber of laboratories by region, federative unit (UF) and legal nature. Most of the units are private and profit making. Re- garding the regional distribution, it is possible to see 10,457 laboratories in the Southeast region (42.2%), especially in São Paulo (4,428) totaling 17.9% of the region.

120 Table 1 Number of health facilities – SADT according to region and state (Jun.20) Source: Ministry of Health – National Registry of Health Facilities in Brazil – CNES. Obtained in Sept. 1/2020. Designed by Abramed. Note: The total number of facilitites according to legal nature differ from the amount showed because of the absence of registry of the nature of some facilities. Abramed Panel | 2020 Region / State Total Share Private Private Public WITH profit WITHOUT profit North 1,209 4.9% 137 Rondônia 288 1.2% 1,057 11 19 Acre 62 0.3% 265 4 9 Amazonas 109 0.4% 53 – 20 Roraima 21 0.1% 88 1 3 Pará 430 1.7% 17 1 70 Amapá 51 0.2% 354 5 5 Tocantins 248 1.0% 46 – 11 4,429 17.9% 234 – 569 Northeast 423 1.7% 3,803 37 60 Maranhão 377 1.5% 362 1 157 Piauí 447 1.8% 214 6 37 Ceará 262 1.1% 404 5 35 Rio Grande do Norte 584 2.4% 227 – 131 Paraíba 662 2.7% 448 2 53 Pernambuco 253 1.0% 595 8 23 Alagoas 163 0.7% 228 1 8 Sergipe 1,258 5.1% 154 1 65 Bahia 10,457 42.2% 1,171 13 443 3,614 14.6% 9,679 255 159 Southeast 657 2.7% 3,362 64 11 Minas Gerais 1,758 7.1% 636 10 81 Espírito Santo 4,428 17.9% 1,645 28 192 Rio de Janeiro 6,328 25.6% 4,036 153 197 São Paulo 2,253 9.1% 5,951 144 60 1,480 6.0% 2,166 26 35 South 2,595 10.5% 1,390 39 102 Paraná 2,337 9.4% 2,395 79 145 Santa Catarina 408 1.6% 2,151 27 31 Rio Grande do Sul 628 2.5% 363 10 62 1,086 4.4% 558 7 46 Midwest 215 0.9% 1,021 10 6 Mato Grosso do Sul 24,760 100.0% 209 – 1.491 Mato Grosso 22,641 474 6.0% Goiás 91.4% 1.9% Federal District Brazil Ratio by legal status

121 The expansion pace of the sec- The pace of growth of tor has been more intense in ab- the sector has been most solute numbers in the Southeast, accelerated in the North and with an increase of 3,269 units, South of the country. going from 7,188 in June 2010 to 10,457 in June 2020. In relative terms, it is possible to observe a faster pace in the North (63.4%), South (61.8%) and Northeast (51.9%) in the same period. Graph 1 Quantity and variation of health facilities – SADT, by region (Jun.10/Jun.20) Source: Ministry of Health – National Registry of Health Facilities in Brazil – CNES. Obtained in Sept. 1/2020. Designed by Abramed. Southeast South Northeast Midwest North ∆ 3,269 2,418 1,513 786 469 The sector of diagnostic medicine nominal 61.8% 51.9% 50.7% 63.4% ∆ % 45.5% 10,457 7,188 6,328 4,429 2,337 Southeast 3,910 2,916 1,551 South Northeast Midwest 740 1,209 Jun.10 Jun.20 North

122 The following maps show the progress of the support service for diagnosis and therapy units, especially in the municipalities in the countryside. The darker areas represent the municipalities with units in June 2010 and 2020. In the last ten years, the number of municipalities WITHOUT the SADT went from 3,016 (54.1%) to 2,104 (37.8%). Map 1 Municipalities with SADT facilities (2010 and 2020) Source: Ministry of Health – National Registry of Health Facilities in Brazil – CNES. Obtained in Sept. 1/2020. Designed by Abramed. Abramed Panel | 2020 June 2010 June 2020 0 3,016 (54.1%) 2,104 (37.8%) > = 1 2,554 (45.9%) 3,466 (62.2%) The distribution of health facilities show a predominance of units in munic- ipalities with population of over 100 thousand inhabitants. It is possible to ob- serve that 54.7% of the support service to diagnostic and therapy units, 50.3% of hospitals and 69.4% of the offices are distributed in a group of 326 munici- palities in the country. Among the regions, the Southeast has 42.2% of the total SADT units, while the South and Northeast have 25.6% and 17.9%, respectively.

Table 2 Distribution of SADT facilities, Hospitals and Doctor’s Offices by population size 123 and region (quantity and percentage distribution – Brazil – Jun.2020) Source: Ministry of Health – National Registry of Health Facilities in Brazil – CNES. Obtained in Sept. 1/2020. Designed by Abramed. Notes: 1Support service to diagnostic and therapy. 2Specialized, General and Day Hospitals. 3Doctor’s Offices. Inhabitants SADT1 % % Hospitals % % Doctor’s % % accumu. accumu. office accumu. Up to 5,000 541 2.2 2.2 174 2.6 2.6 555 0.4 0.4 From 5,001 to 10,000 1,074 4.3 6.5 382 5.9 8.5 1,686 1.1 1.5 From 10,001 to 20,000 2,101 8.5 15.0 883 13.1 21.5 4,772 3.2 4.7 From 2,001 to 50,000 4,083 16.5 31.5 1,221 17.5 39.1 17,212 11.5 16.1 From 50,001 to 100,000 3,405 13.8 45.3 742 10.6 49.7 21,627 14.4 30.6 From 100,001 to 500,000 6,989 28.2 73.5 1,525 21.0 70.7 55,051 36.7 67.2 More than 500,000 6,567 26.5 100.0 2,021 29.3 100.0 49,143 32.8 100.0 Grand Total 24,760 100.0 – 6,948 100.0 – 150,046 100.0 – Region SADT1 % Hospitals % Doctor’s % office Midwest Northeast 2,337 9.4 796 11.5 10,578 7.0 North Southeast 4,429 17.9 2,062 29.7 15,455 10.3 South Brazil 1,209 4.9 582 8.4 4,460 3.0 10,457 42.2 2,430 35.0 79,052 52.7 6,328 25.6 1,078 15.5 40,501 27.0 24,760 100.0 6,948 100.0 150,046 100.0 The sector of diagnostic medicine To count the numbers of health facilities in the National Registry of Legal Entities (CNPJ) Brazil, we can also use the Annual Social Infor- and in the National Institute of Social Secu- mation Report (RAIS).30 This is one of the most rity (INSS) It is possible to identify the number reliable statistic sources about the formal labor of facilities relate to the activities of diagnos- market. RAIS provides a group of relevant vari- tic complementation services and subclasses: ables to understand the dynamics of the diag- laboratories of pathological and cytological nostic medicine market, besides the number of anatomy, clinical laboratories, tomography employment generated in the sector through services, among others. However, the count- information collection on the amount of the ing period of RAIS comprises the year of 2018, employment relations of the public and pri- considering the group of most recent data vate administration of companies registered in available in the database. 30. Established by Decree No 76.900 of 23/12/75. Ministry of Economy / Special Secretariat of Welfare and Labor.

124 In 2018, according to RAIS data, By analyzing the cumulative vari- there were approximately 12,086 clin- ation in the last 10 years, it is possi- ical laboratories and 6,564 units of ble to see an increase of 212.5% in imaging diagnosis services. The follow- the number of human cell and tissue ing graph shows the evolution of the bank facilities. On the other hand, the amount of facilities related to the ser- number of facilities related to patho- vices of diagnostic complementation. In logical anatomy has showed a de- total, there are 24,238 facilities related crease of 4.4%. to diagnostic and therapy services. Graph 2 Number of facilities related to the services of diagnostic complementation31 (2008-2018) Source: RAIS Facilities – Ministry of Labor. Accessed on July 27/20. Designed by Abramed. 14,000 12,086 12,000 10,000 8,000 6,564 6,000 4,000 2,233 2,000 1,350 1,181 462 337 25 Abramed Panel | 2020 0 Anatomy Imaging Tomography Magnetic Dialysis Human Unspecified Clinical Laboratories Diagnosis Services Resonance Chemoterapy Cells and Activities Services Services Radiotherapy Tissue Bank Laboratories Diagnosis Lithotripsy 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 31. Considers the CPNJ exclusive to the related activities.

According to RAIS, there are 125 12,086 clinical laboratories and 6,564 units of imaging diagnosis. Graph 3 The evolution in the number of facilities related to diagnostic and therapeutical activities (2008 base 100 – cumulative variation 2008-2018) Source: RAIS Facilities – Ministry of Labor Accessed on July 27/20. Designed by Abramed. 212.5% Note: Legend in order from the bigger to the smaller related to the variation between 2008 and 2018. 250% 200% 150% 161.2% 100% 87.2% The sector of diagnostic medicine 83.8% 50% 71.1% 0% 17.8% -4.4% -50% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Human cells and tissues bank Tomography services Imaging diagnosis services Magnetic resonance services Dialysis, chemotherapy, radiotherapy, hemotherapy, lithotripsy services Pathology and cythopatology anatomy laboratories Clinical laboratories

126 Considering the variation in the regions between 2008 and 2018, the North, North- east and Midwest have recorded a faster expansion. In these regions, the number of clinical laboratories increased 123.4%, 107.5% and 94.5%, respectively, in the last ten years. In addition, they have shown an even bigger increase in the imaging diagnosis centers, with a variation of 273.4%, 265.9% and 201.8%, respectively. Table 3 Number of facilities related to the services of diagnostic complementation (2008/2018) Source: RAIS Facilities – Ministry of Labor Accessed in July 27/20. Designed by Abramed. Note: ∆(abs) – Absolute variation Region Clinical Imaging Pathological and Tomography Magnetic Laboratories Diagnosis Cytological Anatomy Services Resonance Services Laboratories 2008 2018 10 7 2008 2018 2008 2018 2008 2018 2008 2018 42 79 157 163 North 325 726 94 351 71 92 10 20 54 62 23 26 Northeast 1,342 2,785 328 1,200 315 347 35 110 286 337 Southeast 2,770 4,808 1,246 3,016 648 557 132 197 South 1,544 2,610 574 1,179 230 231 59 80 Midwest 595 1,157 271 818 148 123 34 55 Total 6,576 12,086 2,513 6,564 1,412 1,350 270 462 Region ∆(abs) ∆ (%) ∆(abs) ∆ (%) ∆(abs) ∆ (%) ∆(abs) ∆ (%) ∆(abs) ∆ (%) North Northeast 401 123.4 257 273.4 21 29.6 10 100.0 -3 -30.0 Southeast South 1,443 107.5 872 265.9 32 10.2 75 214.3 37 88.1 Midwest Total 2,038 73.6 1.770 142.1 -91 -14.0 65 49.2 6 3.8 1,066 69.0 605 105.4 1 0.4 21 35.6 8 14.8 562 94.5 547 201.8 -25 -16.9 21 61.8 3 13.0 Abramed Panel | 2020 5,510 83,8 4,051 161,2 -62 -4,4 192 71,1 51 17,8 An interesting data is that most of the companies that act in the diagnos- tic medicine sector have a small structure in comparison to the number of em- ployees. On average, 78.8% of the companies in the segments that have been analyzed has up to nine employees. On the other hand, less than 1% of the com- panies have more than 100 employees. These numbers show that family compa- nies prevail in the sector.

Table 4 Diagnostic medicine companies’ structure by number of employees (2018) Source: RAIS Facilities – Ministry of Labor. Accessed in 27/7/20. Prepared by Abramed. 127 Size (employess) Clinical Imaging Pathological and Tomography Magnetic Laboratories Diagnosis Cytological Anatomy Services Resonance Services Laboratories 30 9 205 123 0 Employees 731 372 63 107 65 66 64 From 1 to 4 6,414 3,517 635 39 53 13 19 From 5 to 9 2,509 1,336 281 1 2 1 1 From 10 to 19 1,361 776 223 – 1 – – From 20 to 49 710 412 115 462 337 From 50 to 99 223 102 20 From 100 to 249 112 40 11 From 250 to 499 15 8 2 From 500 to 999 8 1 – 1,000 or More 3 – – Total 12,086 6,564 1,350 Regarding the type of registration at RAIS, the biggest part of facilities re- lated to the activities of the diagnostic complementation services has a regis- try at the National Registry of Legal Entities (CNPJ), while a small portion has is registered at the Work’s National Register (CNO) or at the Registry of Economic Activities for Private Individuals (CAEPF) in 2018. Table 5 Type of RAIS registration of the diagnostic medicine companies (2018) The sector of diagnostic medicine Source: RAIS Facilities – Ministry of Labor. Accessed in July 27/20. Designed by Abramed. Type of Clinical Imaging Pathological and Tomography Magnetic registration Laboratories Diagnosis Cytological Anatomy Services Resonance Services amount % amount % amount % Laboratories amount % amount % CNPJ 12,011 99.4 6,406 97.6 1,303 96.5 456 98.7 322 95.5 CEI 68 0.6 116 1.8 46 3.4 6 1.3 12 3.6 CAEPF 7 0.1 42 0.6 1 0.1 – – 3 0.9 Total 12,086 100.0 6,564 100.0 1,350 100.0 462 100.0 337 100.0

Imaging diagnosis 128 equipment According to CNES data, 138,135 equipment for imaging diagnosis were in use in Brazil in December 2019. In the same period, there were 47,624 equipment of graphic methods and 43,147 of optical methods. The diagnostic medicine sector invests in the development of new technologies every year. The advance of tech- nology in the laboratory and imaging equipment allows the diagnostic exams to be performed on a larger scale, less time and with better quality and accuracy, preserving the well-being of the patients. The data is this section was updated up to December 2019 because of discrepancy in the results found for the month of Graph 4 Quantity of equipment for imaging diagnosis, graphic and optical methods in use in Brazil (2010-2019) Source: Ministry of Health – National Registry of Health Facilities in Brazil – CNES. Accessed on Sept. 30/2020. Designed By Abramed. 160,000 140,000 138,135 Abramed Panel | 2020 120,000 Quantity of equipments 100,000 88,694 80,000 60,000 47,624 40,000 43,147 20,000 30,659 28,500 Imaging diagnosis Optical Methods Graphic Methods 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

129 June 2020. The following graph shows the evolution in the amount of equipment in the last ten years. In Brazil, there is a predominance in the ultrasound equipment, with 41,644 available units in use by the end of 2019, followed by 28,539 x-ray equipment and 5,847 mam- mography equipment. The imaging equipment for more accurate exams such as the tomography, magnetic resonance, gamma camera and PET/CT have totaled, together, 8,516 equipment in use in the country. Graph 5 Quantity of equipment for imaging diagnosis, in use in Brazil (2010-2019) Source: Ministry of Health – National Registry of Health Facilities in Brazil – CNES. Accessed on Sept. 30/2020. Designed By Abramed. Note: X-ray does not consider dental X-ray equipment. 84,546 57,943 Quantity of equipments41,644 25,102 28,539 The sector of diagnostic medicine 23,942 4,214 5,847 4,989 2,702 780 743 2,803 1,102 82 Total Ultrasound X-ray Mammograph CT Scan Magnetic Gamma PET/CT Resonace camera 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

130 Graph 6 Equipment and exams – magnetic resonance (2018 or most recent year) Source: OECD Health Statistics 2019. ANS – Supplementary Health Care Map 2019. Ministry of Health – SUS Outpatient Information System. Designed by Abramed. Note: Equipment by million inhabitants and exams by thousand inhabitants. Brazil SUS and Brazil SS (Complementary Health) consider the same number of equipment. Japan 55.2 112.3 United States 118.9 37.6 143.4 Germany 114.1 Abramed Panel | 2020 South Korea 34.7 71.4 36.3 74.1 Italy 29.1 Switzerland 28.6 64.7 OCDE Average 23.3 16.7 88.0 Spain France 16.3 Australia Brazil SUS 14.2 44.8 Brazil SS 14.2 Canada 8.6 177.5 12.9 12.9 50.5 10.0 0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 200.0 Exams (per thousand) Equipment (per million)

131 Regarding the number of magnetic resonance equip- ment by a million inhabitants, Brazil is in a position below average among the OECD members (16.7) with 12.9 equipment for a million inhabitants. The resonance exam is widely used for detecting neurological, orthopedic, ab- dominal, cervical and cardiac diseases, and it can also con- tribute to the diagnosis of other diseases, such as multiple sclerosis, cancer, heart problems and some infections. The same occurs regarding the number of tomogra- phy’s by a million inhabitants. While the average for the OECD members is of 26.8 equipment per million of inhab- itants, in Brazil this proportion in 23.7. Graph 7 Equipment and exams – CT Scan (2018 or most recent year) Source: OECD Health Statistics 2019. ANS – Supplementary Health Care Map 2019. Ministry of Health – SUS Outpatient Information System. Designed by Abramed. Note: Equipment by million inhabitants and exams by thousand inhabitants. Brazil SUS and Brazil SS (Complementary Health) consider the same number of equipment. Japan 64.4 111.5 230.8 United States 134.4 204.6 42.6 270.5 Germany 39.3 109.9 189.7 South Korea 38.2 The sector of diagnostic medicine 35.1 148.5 Italy 34.7 89.9 Switzerland 26.8 OCDE Average 36.2 144.1 23.7 Spain 23.7 163.1 France 18.6 114.9 Australia 17.4 Brazil SUS 15.3 159.4 Brazil SS Canada 0.0 50.0 100.0 150.0 200.0 250.0 300.0 Exams (per thousand) Equipment (per million)

132 Brazil does not show consistency deadlines for providing care regard- in the distribution of imaging diagno- less of the existence of a healthcare sis equipment, with a bigger availabil- network. In this case, by offering a ity in some regions and shortage in product, the operator must guarantee other regions. Such situation makes it the service in another provider and in difficult for the population to have ac- case this is not possible, it must guar- cess to important exams in the early antee the service in another municipal- detection of diseases, and this can be ity, or still fully reimburse the service’s seen in the map below, that shows expenses. The current legislation and the distribution of selected equip- regulation set a minimum standard for ment: While some regions concen- healthcare coverage considering the trate an important part of the supply, LIST of procedures and health events, other regions are far from any imag- and that certainly makes it difficult ing service center. to expand the population covered by private healthcare plans. Having more The Normative Resolution (RN) nr. flexible rules with products suitable to 259 from ANS, guarantees that the regional specificities and more afford- beneficiary of private healthcare plans able prices could certainly contribute will be attended and establishes the to the growth of the market. Map 2 Gamma Camera equipment by municipality (Dec.2019) Source: Ministry of Health – National Registry of Health Facilities in Brazil – CNES. Accessed on Sept. 30/2020. Designed By Abramed. Abramed Panel | 2020 Gamma camera Municipality Total apparatus 743 Possesses (#) 217 0 Does not have (#) 5,353 >=1 Possesses (%) 3.9% Does not have (%) 96.1%

133 A shortage of diagnostic equipment makes it difficult to access essential tests for early detection of diseases. Map 3 Mammography equipment by municipality (Dec.2019) Source: Ministry of Health – National Registry of Health Facilities in Brazil – CNES. Accessed on Sept. 30/2020. Designed By Abramed. Municipality Mammography The sector of diagnostic medicineTotal apparatus 5,847 Possesses (#) 1,234 0 Does not have (#) 4,336 >=1 Possesses (%) 22.2% Does not have (%) 77.8%

Map 4 PET/CT equipment by municipality (Dec.2019) 134 Source: Ministry of Health – National Registry of Health Facilities in Brazil – CNES. Accessed on Sept. 30/2020. Designed By Abramed. PET/CT Total apparatus 82 Municipality Possesses (#) 35 0 Does not have (#) 5,535 >=1 Possesses (%) 0.6% Does not have (%) 99.4% Map 5 CT Scan equipment by municipality (Dec.2019) Source: Ministry of Health – National Registry of Health Facilities in Brazil – CNES. Accessed on Sept. 30/2020. Designed By Abramed. Abramed Panel | 2020 CT Scan Total apparatus 4,989 Municipality Possesses (#) 850 0 Does not have (#) 4,720 >=1 Possesses (%) 15.3% Does not have (%) 84.7%

Map 6 Magnetic Resonance equipment by municipality (Dec.2019) Source: Ministry of Health – National Registry of Health Facilities in Brazil – CNES. Accessed on Sept. 30/2020. Designed By Abramed. 135 Magnetic Resonance Total apparatus 2,702 Municipality Possesses (#) 507 0 Does not have (#) 5,063 >=1 Possesses (%) 9.1% Does not have (%) 90.9% Map 7 Ultrasound equipment by municipality (Dec.2019) Source: Ministry of Health – National Registry of Health Facilities in Brazil – CNES. Accessed on Sept. 30/2020. Designed By Abramed. Ultrasound The sector of diagnostic medicine Total apparatus 41,644 Municipality Possesses (#) 3,731 0 Does not have (#) 1,839 >=1 Possesses (%) 67.0% Does not have (%) 33.0%

136 Labor market in the diagnostic medicine sector Abramed Panel | 2020 The diagnostic medicine sector was responsible for 264.2 thou- sand jobs32 in 2019, with an in- crease of 2.4% in comparison with the year before. Considering the group of activities related to the health market33, there were more than 2.3 million jobs, an increase of 4.0% in the same basis of compar- ison. This contingent corresponds to 5.9% of the total of formal em- ployment’s’ contracts34 in Brazil, and every year the sector has in- creases its participation in the for- mal labor market. According to CAGED, the laboratories of clinical and pathological anatomy anal- ysis are responsible for 50.9% of the formal contracts in the sector, while the imaging services corre- spond to 23.1%. By analyzing the rate of change in the last five years, it is possible to notice that the number of employ- ees in the diagnostic medicine sec- tor has increased, in average, 3.4% per year35, while the health market increases 3.1% and the labor mar- ket decreased -0.1%. Despite the development of new technologies and methods of laboratory and im- aging diagnosis, it is a labor-inten- sive sector.

Table 6 Number of jobs in the diagnostic and therapeutical medicine sector, health market and labor market (2015-2019) Source: CAGED – General Registry of Employed and Unemployed people. Designed By Abramed. 137 Type of facility 2015 2016 2017 2018 2019 12,734 13,290 13,626 Pathological and cytological anatomy Laboratories 13,441 12,773 107,776 117,540 120,983 The sector of diagnostic medicine 95,756 103,588 16,228 17,625 18,319 Clinical Laboratories 15,202 15,270 4,521 4,541 4,779 3,733 4,339 39,301 41,408 42,065 Dyalisis and nephrology services 36,420 39,258 5,173 5,958 5,973 3,156 3,666 7,561 8,235 8,267 Tomography services 5,764 5,961 1,992 2,164 2,210 Diagnostic imaging services with the use of 1,739 1,797 ionizing radiation, except tomography 3,303 3,046 3,119 2,663 3,009 5,054 4,827 4,816 Magnetic resonance services 4,557 4,832 1,264 1,153 1,202 1,312 1,194 7,968 6,992 7,267 Diagnostic imaging services without the use of 7,931 7,886 80 85 84 ionizing radiation, except magnetic resonance 73 70 180 309 327 196 222 31,267 30,768 31,202 Diagnostic Services by graphic record – ECG, EEG, 39,228 32,324 and othe similar exams 244,402 257,941 264,239 231,171 236,189 Diagnostic services by optical methods – endoscopy 2,121,573 2,202,459 2,291,487 and other similar exams Chemotherapy services Radiotherapy services Hemotherapy services Lithotripsy services Human cells and tissues bank services Diagnostic and therapeutic complementation service activities not otherwise specified anteriormente Total diagnostic and therapeutic complementary service activities Total Health Market1 2,028,038 2,066,002 Total Labor Market 39,202,505 37,875,947 37,863,983 38,410,428 39,054,507 32. Data drawn from the employment stock of the sector in 2018 and the sum of the movements in 2019. 33. Hospital care activities, Mobile emergency care services, Patient removal services, except mobile emergency care services, Outpatient care ac- tivities performed by physicians and dentists, Diagnostic and therapeutic complementary service activities, Activities of health care profession- als except physicians and dentists, Health management support activities, Human health care activities not previously specified, Activities to assist the elderly, physically handicapped, immunosuppressed and convalescents provided in collective and private homes, Activities to pro- vide infrastructure support and assistance to patients at home, Activities to assist psychosocial and health care for people with mental disorders, mental deficiency and chemical dependency. 34. Formal employment considering hiring by means of the CLT. 35. CAGR – 2015/2019.

138 Regarding the distribution of the number of employees by geographic region, 53.3% of the total are distributed in the Southeast, followed by 18.4% on the Northeast, 13.9% in the South, 9.7% in the Midwest and 4.7% in the North. Table 7 Number of jobs in the diagnostic and therapeutical medicine sector, by region (2019) Source: CAGED – General Registry of Employed and Unemployed people. Designed By Abramed. Type of facility North Northeast Southeast South Midwest 1,909 1,178 Pathological and cytological anatomy Laboratories 1,003 2,828 6,708 18,129 11,698 2,412 2,009 Clinical Laboratories 6,418 23,869 60,869 914 567 6,282 5,086 Dyalisis and nephrology services 1,030 4,078 8,790 1,127 385 1,208 988 Tomography services 208 1,029 2,061 287 292 Diagnostic imaging services with the use of 1,558 6,753 22,386 ionizing radiation, except tomography 367 452 596 403 Magnetic resonance services 180 1,331 2,950 357 133 526 491 Diagnostic imaging services without the use of 303 1,959 3,809 20 – ionizing radiation, except magnetic resonance 19 2 2,605 1,867 Diagnostic Services by graphic record – ECG, EEG, 239 548 844 and othe similar exams 36,758 25,551 Diagnostic services by optical methods – endoscopy 172 500 1,628 362,033 203,933 and other similar exams Chemotherapy services 250 823 2,744 Radiotherapy services 35 172 505 Abramed Panel | 2020 Hemotherapy services 86 1,074 5,090 Lithotripsy services 12 4 48 Human cells and tissues bank services – 5 301 Diagnostic and therapeutic complementation service 847 3,770 22,113 activities not otherwise specified anteriormente Total diagnostic and therapeutic complementary 12,341 48,743 140,846 service activities Total Health Markett1 88,904 401,446 1,235,171

139 Table 8 Number of jobs in the diagnostic and therapeutical medicine sector, by age group (2019) Source: CAGED – General Registry of Employed and Unemployed people. Designed By Abramed. Type of facility Upt to 17 18 to 24 25 to 29 30 to 39 40 to 49 50 to 64 65 or older Pathological and cytological anatomy Laboratories 76 2,640 2,437 4,376 2,701 1,322 74 Clinical Laboratories 861 23,771 22,755 40,971 22,216 9,881 528 Dyalisis and nephrology services 71 2,057 2,499 7,050 4,568 1,991 83 Tomography services 48 846 821 1,794 933 332 5 Diagnostic imaging services with the use of 355 8,108 7,795 14,818 7,629 3,164 196 ionizing radiation, except tomography Magnetic resonance services 49 1,205 1,174 2,096 1,040 380 29 Diagnostic imaging services without the use of 62 1,546 1,472 2,751 1,616 773 47 ionizing radiation, except magnetic resonance Diagnostic Services by graphic record – ECG, EEG, 13 426 426 753 385 198 9 and othe similar exams Diagnostic services by optical methods – endoscopy 13 441 507 1,152 698 298 10 The sector of diagnostic medicine and other similar exams Chemotherapy services 23 495 811 2,030 1,028 408 21 Radiotherapy services 11 127 225 478 245 108 8 Hemotherapy services 17 706 927 2,483 1,668 1,322 144 Lithotripsy services – 9 11 21 25 18 – Human cells and tissues bank services 7 30 66 121 71 29 3 Diagnostic and therapeutic complementation service 298 5,732 5,168 10,912 6,027 2,889 176 activities not otherwise specified anteriormente Total diagnostic and therapeutic complementary 1,904 48,139 47,094 91,806 50,850 23,113 1,333 service activities Total Health Market1 15,343 233,034 372,200 820,887 539,889 309,185 13,422

Graph 8 Ratio of jobs in the diagnostic and therapeutical medicine sector, health market and labor market by group age (2019) 140 Source: CAGED – General Registry of Employed and Unemployed people. Designed By Abramed. 34.7% 35.6% 30.4% 18.2% 17.8% 23.4% 22.4% 19.2% 15.0% 16.2% 16.0% 13.9% 13.4% 10.1% 8.7% 0.7% 0.7% 1.0% 0.5% 0.6% 1.3% Up to 17 18 to 24 25 to 29 30 to 39 40 to 49 50 to 64 65 + Health Market Diagnostic and therapeutic complementary service activities Labor Market Abramed Panel | 2020 The proportion The analysis of the number of em- of jobs in the ployed people by age group shows that sector according the in the diagnostic service activities to age is highest 34.7% of the employees are between 30 in the 30 to 39 and 39 years old, and 19.2% are between age group. 40 and 49 years old. It is possible to ob- serve that the ratio in the diagnostic sec- tor is coordinated with the health market and labor market in general. However, in contrast to the other sectors, it is possi- ble to notice a ratio 18.2% of employees between 18 and 24 years old. This ha- ppens because of the high level of em- ployability, especially in the laboratory and imaging activities, among which we can highlight the share of people with te- chnical training.

Incorporation 141 of new diagnostic exams T he incorporation of new The process of updating the List The sector of diagnostic medicine procedures in the supple- is drawn up with the participation of mentary health market is the Permanent Healthcare Regula- regulated by the Norma- tion Committee (COSAÚDE), in advi- tive Resolution nr. 439/2018 through sory character. It is the forum through updating cycles, which occur every which establishes the permanent con- two years. The definition of guidelines versation with the supplementary to use and classify procedures of high health agents and with the society complexity are defined by ANS. about the issues of regulation of health care in the supplementary health. At The proposals for requesting in- the end of this, ANS performs a tech- clusion, exclusion or alteration of a nical analysis of eligible proposals, that technology must meet a series of is, the ones who complied with all the mandatory information requirements: information requirements provided present a Scientific Technical Report in Art. 9 of RN 439/2018. After that, (PTC) or a Systematic Review, with the proposals are submitted to Pub- the description the scientific evidence lic Consultation, subsidizing decisions related to efficacy, effectiveness, ac- about the List of updates. curacy and health technology secu- rity being proposed, as well as the The procedures incorporated by Economic Evaluation in Health (AES) ANS through the List are the ones and Budgetary Impact Analysis (AIO). who present collective gain and bet- The proposals must also consider as ter clinical results for the patients. The reference the updated editions of inclusion of new technologies is pre- the methodological guidelines of the ceded by a careful evaluation pro- Ministry of Health, elaborated to each cess, in accordance with the national one of the themes and available in the health policies and contemplates the virtual library of the National Com- scientific evidences, social necessity, mission for the Incorporation of Tech- resources availability and the preva- nologies from SUS (CONITEC). lence of diseases in the population.

. 142 To evaluate the estimates of bud- of validity of the new List, the year getary impact developed around the of 2018, in quantitative and care ex- group of 10 exams incorporated with penses, compared to the estimates the publication of the List 2018 in (expectations) pointed out through the Supplementary Health, Abramed preliminary studies before the man- has used an analysis methodology datory coverage established by that consists in the observation of the National Supplementary Health results (reality) after the first year Agency (ANS). Abramed Panel | 2020 New Diagnostic technologies play an In the beginning of 2018, the new essential role List of Procedures and Health Events, in the quality, that has established the minimum swiftness and standard coverage of healthcare precision of plans and insurances, among other diagnosis. procedures, 10 new complementary exams related to diagnostic medicine. The new technologies perform a key role in quality, speed and accuracy of diagnosis, also enabling the defini- tion and monitoring of treatments, in- creasing the chances of control and cure of diseases. Another important factor is that the new technologies, through pre- dictive and non-invasive exams, value more and more the well-be- ing of patients, promoting health and prevention of diseases. However, many times the incorporation of new health procedures is pointed out as one of the main factors that drive the increase of the care expenditure in the world, according to many au- thors and studies36. 36. BALFOUR et al., 2004; BECKER, 2004; CAREY, 2003; HOF, 2003; VASSALO, 1997. Is Technological Change In Medicine Worth It?

It is crucial to analyze the trade- sequences arising from the adoption 143 off37 between the contributions in of a new health technology or pro- healthcare quality to the population cedure (intervention), considering a and the budgetary and financial im- specific scenario of health with lim- pact for the government and com- ited resources. Therefore, AIO is a panies. Therefore, it is necessary to fundamental tool for budget manag- evaluate accurately the variation in ers in the public and supplementary the medical expenditure arising from health, assisting the budget estimate the process of incorporation of new in a defined period. However, its use technologies, especially regarding is not recommended to generalize re- the estimates of budgetary impact sults, that is, the budgetary impact made for the group of exams incor- analysis must be elaborated for spe- porated in the supplementary health. cific circumstances39. Before presenting the analy- In the analysis elaborated by sis about the estimates and results Abramed, the premises for the devel- found, it is important to conceptual- opment of the budgetary impact es- ize the basis of the study presented timate have considered: data about by the National Industry Confedera- the number of exams incorporated in tion (CNI): Budgetary impact anal- the List 2018, provided by ANS; data ysis (AIO)38. AIO can be defined as from the CNI study; and data from the evaluation of the financial con- Abramed’s associates. Quantity of estimated exams versus performed exams According to the CNI study, in the timated and performed, it is possible The sector of diagnostic medicine first year of validity of the List in 2018, to notice that the estimates pointed 77,411 new exams were supposed to out by CNI and released at the defi- be performed. However, in the period nition of the Rol only reached 48.6%; mentioned the number of exams was considering the quantity computed 37,665 according to Abramed’s asso- by Abramed, it reached 7.9% of the ciates data, and 6,116 according to ANS amount estimated for 2018, based on data, as shown in the following table. the quantity of exams performed and Regarding the quantity of exams es- registered by ANS. 37. Trade-off or tradeoff is characterized by an economic action aimed at solving one problem, but entails another, forcing a decision. 38. Budgetary impact analysis of technologies incorporated by the 2018 roll of the ANS – National Confederation of Indus- try – CNI. 39. Alvarez (2012, cap. 10)

144 Table 9 Quantity and proportion of laboratory and imaging selected exams – estimated by CNI and performed according to Abramed and ANS (2018) Sources: CNI, Abramed and ANS. Designed By Abramed. Estimated – Observed Variation (%) Budgetary Ratio Observed Exams impact analysis vs. Estimated Arterial angiotomography of lower limb Quantity (%) Kappa / Lambda free light chains Antigens of Aspergillus Galactomannan CNI Abramed ANS Abramed ANS CSF flow magnetic resonance imaging (MRI) Ultrasound Liver Elastography 20,038 1,970 1,716 9.8 8.6 Detection / typing Herpes Viruses 1 and 2 in CSF ALK – Mutation research 19,362 15,113 n,d, 78.1 n.d. Aquaporin 4 (Aqp4) Lower limb arterial angio-MRI 13,984 10,058 n,d, 71.9 n.d. 5,815 1,247 474 21.4 8.2 5,135 1,929 3,680 37.6 71.7 4,481 1,718 n,d, 38.3 n.d. 4,363 209 18 4.8 0.4 1,640 3,220 n,d, 196.3 n.d. 1,625 240 174 14.8 10.7 Toxoplasmosis – Amniotic Fluid Research by PCR 998 1,961 54 196.5 5.4 Total 77,441 37,665 6,116 48.6 7.9 Total of exams in Supplementary Health 861,460,048 Participation 0.009% 0.004% 0.001% Abramed Panel | 2020 It is important to highlight to the ANS List will generate a that the quantity of exams es- marginal increase both in quan- timated by the CNI study rep- titative terms and regarding the resented only 0.009% of the healthcare expenditure. Being total of exams performed in the careful by making these affir- complementary health in 2018. mations so as not to generate Based on ANS data, this amount movements that influence in has corresponded to 0.001% of the reduction of the exams and the total, and on Abramed’s as- diagnostic procedures alone, sociates, the amount was of requires a base focused on the 0.004%. Therefore, it is possi- outcome of the patient’s health, ble to estimate that the incor- otherwise it could cause irre- poration of this group of exams versible damage.

Healthcare expenditure The CNI study has estimated a by CNI correspond only to 0.024% of 145 healthcare expenditure of R$ 50.9 mil- the amount of expenses in 2018 based lion for 2018, based on the group of 10 on the numbers gathered by ANS, and exams incorporated to the List. How- 0.060% considering the numbers gath- ever, it was possible to observe, based ered by Abramed’s associates. The on ANS and Abramed’s data, the total premises around the amount-computed of R$ 7.9 million and R$ 20.0 million, re- take into account the exams performed spectively. In this case, the estimates multiplied by the value of the exams ac- with healthcare expenditure pointe out cording to the CNI study. Table 10 Exams expenditures according to CNI study and amounts registered by Abramed and ANS based on the premises of the CNI study (2018) Sources: CNI, Abramed and ANS. Designed By Abramed. Estimated – Variation (%) Budgetary impact Observed Observed analysis vs. Estimated Exams R$ CNI Abramed ANS Abramed ANS Arterial angiotomography of lower limb 11,518,265 1,132,395 986,391 9.8 8.6 Kappa / Lambda free light chains 14,400,929 11,240,898 n,d, 78.1 n.d. Antigens of Aspergillus Galactomannan 691,215 497,167 n,d, 71.9 n.d. CSF flow magnetic resonance imaging (MRI) 2,087,801 447,723 170,185 21.4 8.2 Ultrasound Liver Elastography 8,684,384 3,429,762 6,543,040 39.5 75.3 Detection / typing Herpes Viruses 1 and 2 in CSF 2,209,799 847,300 n,d, 38.3 n.d. ALK – Mutation research 8,725,529 418,000 36,000 4.8 0.4 The sector of diagnostic medicine Aquaporin 4 (Aqp4) 506,340 994,207 n,d, 196.4 n.d. Lower limb arterial angio-MRI 1,674,357 247,334 179,317 14.8 10.7 Toxoplasmosis – Amniotic Fluid Research by PCR 387,855 838,131 23,080 216.1 6.0 Total 50,886,474 20,092,919 7,938,013 39.5 15.6 Total expenditure in Supplementary Health Participation 160,072,341,642 Total expenditure for exams in Supplementary Health Participation 0.032% 0.013% 0.005% 33,565,948,039 0.152% 0.060% 0.024%

146 The technological advance applied to health contributes to an increase of life expectancy. Abramed Panel | 2020 It is crucial that the incorpora- generated by this advance support tion of new health technologies, its incorporation in the healthcare among other, be preceded by the cycle. Despite several positive ad- analysis of the budgetary impact vances in this regard, overuse, un- and, is this way, the CNI study is an derutilization and misuse of health appropriate initiative, aligned with resources coexist. the information required in the peri- odical updating process of the List Some systematic analysis has of Procedures and Health Events, also shown the use beyond what is within the scope of ANS after the necessary to carry out diagnostic release of RN nr. 439/2018. exams in many countries. Yet, it is crucial to highlight that performing However, the study must be preventive exams and monitoring treated as a complement to the symptoms that show normal results cost effectiveness analysis, among must never be considered a waste. others, and not as an alternative or Currently, there is no availability of conclusive analysis, that replaces patient’s clinical information that all other economic evaluation in the allows the doctor to make an ac- health sector. Because it is an es- curate association between the re- timate of the impact of adopting sult(s) of the exams and the record a new technology or procedure, of monitored pathologies. there might be occasions in which the budgetary analysis shows that This advance is transforming the the incorporation is not efficient, health care and the way doctors re- specifically considering the finan- late to patients. Most of the times a cial implications. new technology will bring benefits on a large scale, with efficiency for It is unquestionable that the the diagnosis, treatment, and clinical technological advance applied to outcome of the patients and, most health contributes to an increase of all, it will be in convergence with of life expectancy, and the benefits the health market’s sustainability.

Care production 147 in the diagnostic medicine sector Supplementary Health The sector of diagnostic medicine In 2019, the beneficiaries of private healthcare plans performed over 1.6 billion of care procedures, such as doctor’s appointments, complementary exams, ther- apies, hospitalizations, and dental procedures. In comparison to the year before, the increase was of 2.4% and represents the lowest annual variation rate since 2014. Considering the type of event, the number of hospitalizations was the one with the biggest increase: 6.5% in comparison to the previous year.

148 Table 11 Quantity of procedures performed in Supplementary Health (million – 2015-2019) Source: ANS – Care Map of Supplementary Health 2019. Designed by Abramed. Procedures 2015 2016 2017 2018 2019 ∆ (%) 2019/2018 Total 1,377.7 1,465.6 1,515.5 1,577.7 1,616.4 2.4 Doctor's appointements 266.7 273.0 270.3 274.4 277.5 1.2 Other outpatient care 136.6 141.2 157.0 164.2 158.8 -3.3 Complementary Exams 747.0 796.8 816.9 861.5 916.5 6.4 Therapies 48.4 70.0 77.2 93.4 72.1 -22.9 Hospitalizations 7.9 7.8 8.0 8.1 8.6 6.5 Dental procedures 171.2 176.9 186.1 176.2 182.8 3.8 Abramed Panel | 2020 In the same period, 916.5 million exams were per- 916.5 million formed, with an increase of 6.4% in comparison to Diagnostic exams 2018. Considering the group of exams in which the performed in information is specified by the operators on SIP (Pri- 2019 in the vate Health Insurance Information System – ANS), the supplementary highlights are: 31.7 million x-rays; 8.3 million magnetic health. resonances; and 7.7 million CT scans, with a decrease of 0.5% and an increase of 5.5% and 3.7%, respec- tively, in comparison to the previous year. The in- crease in the quantity of exams in the supplementary health is essentially due to the performance of low cost exams. According to data from ANS’s D-TISS40, in 2018, the x-rays exams have showed an average value of R$ 24.61 per exam, and the glycated hemo- globin R$ 12.82 and 20.20 per exam. 40.The D-TISS is a panel provided by the National Agency for Supplementary Health (ANS) to consult data received through the TISS Standard (Standard for Exchange of Information on Supplementary Health). It is possible to view the amount and average value of fees charged in outpa- tient procedures (doctors, laboratories, clinics) and in procedures performed in a hospital environment in establishments that provide services to health care operators.

Table 12 Quantity of complementary exams performed in the Supplementary Health 149 (million – 2015-2019) Source: ANS – Care Map of Supplementary Health 2019. Designed by Abramed. Complementary Exams 2015 2016 2017 2018 2019 ∆ (%) 2019/2018 Complementary Exams 747.0 796.8 816.9 861.5 916.5 6.4 Radiography 34.8 34.4 33.1 31.8 31.7 -0.5 Magnetic resonance 6.5 7.1 7.4 7.9 8.3 5.5 CT Scan 6.6 7.1 7.2 7.4 7.7 3.7 Abdominal ultrasound exam 6.1 6.4 6.5 6.9 7.4 7.1 Diagnostic ultrasound of the lower abdomen 8.2 7.7 7.0 6.7 7.0 5.2 Oncotic cervical-vaginal cytopathology in women aged 25 to 59 years 6.8 6.6 6.3 6.1 6.3 3.0 Transthoracic echocardiography 5.0 5.1 5.2 5.2 5.7 9.9 Conventional and digital mammography 5.1 5.1 5.0 5.0 5.1 1.8 Mammography in women aged 50 to 69 years 2.3 2.3 2.3 2.3 2.4 2.9 Exercise testing (CPET) 3.5 3.5 3.4 3.4 3.6 6.6 Upper digestive endoscopy 3.3 3.1 3.2 3.3 3.4 1.1 Bone densitometry – any segment 2.2 2.2 2.2 2.2 2.3 3.5 24 h holter monitoring 1.1 1.2 1.2 1.3 1.5 11.2 Colonoscopy 1.1 1.1 1.2 1.2 1.3 10.9 Diagnostic ultrasound of the upper abdomen 1.0 1.0 1.0 0.9 1.0 2.9 Morphological obstetric ultrasound 1.1 1.0 1.0 1.0 1.0 -0.9 The sector of diagnostic medicine Myocardial scintigraphy 0.6 0.6 0.5 0.5 0.5 5.7 Bronchoscopy with or without biopsy 0.1 0.1 0.1 0.1 0.1 3.2 Dynamic renal scintigraphy 0.0 0.0 0.0 0.0 0.0 3.1 Glycated hemoglobin 10.0 11.0 12.0 13.5 15.7 16.6 Search for occult blood in feces in people aged 50 to 69 1.0 1.0 1.1 1.1 1.2 10.0