Management towards financial sustainability for private health companies

Abstract

Purpose The purpose of this study was to identify a set of management practices towards financial sustainability for Brazilian private health insurance and plans companies. Design/methodology/approach The present paper uses a bimodal two-step approach. The first step was quantitative, with the data envelopment analysis (DEA) technique in 521 Brazilian private health companies (PHCs). At this stage, the objective was to obtain scores to rank the PHCs regarding their financial performance and services in 2013. From the quantitative analysis, two PHCs displaying contrasting performances were selected and interviewed to identify differentiating management practices. Findings The Group Medicine PHCs displayed a higher performance in the financial approach. Following the qualitative comparative analysis, the financially sustainable PHC presented the following differentials: a high level of financial management professionalization, a deliberate policy for the control and prevention of claims and a larger share of revenues from health plans over service revenues. Research limitations/implications However, a limitation of the study lies in the fact that by not using any cash flow or financial result variables, the financial efficiency model used in the study does not evaluate the generation capacity of long-term results. It is noteworthy that, because it is a multiple case study, the results found cannot be generalized and should be understood only as characteristics of the studied PHCs in here. Practical implications The present paper can contribute to managers of Brazilian PCHs towards the implementation of management tools aimed at the sustainability of those organizations. Originality/value Despite the importance of the Supplemental Health Insurance System for public health in Brazil, PHCs have received a high volume of complaints and struggled with constant financial problems.